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03-27-2008, 12:03 PM
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Status: Administrator
Join Date: Feb 2008
Posts: 377
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What is a “forward” transaction?
A: In a forward contract, two parties irrevocably agree to settle a trade at a future date,
for a stated price and quantity. No money changes hands at the time the trade is agreed upon. Suppose a buyer L and a seller S agree to do a trade in 100 grams of gold on 31 Dec 2001 at Rs.5,000/tola. Here, Rs.5,000/tola is the “forward price of 31 Dec 2001 Gold”. |
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