Forward (Forward Contract, Forwards) is a term for off-exchange (OTC) financial contract between two entities on the future asset purchase by the buyer at a predetermined date and at a pre-agreed price. Future commitments in forward contracts are reversible - the obligation of the purchaser to buy, and of the seller to sell the asset.
Forward is the simplest financial derivative.
Forwards in practice: Forward contracts are used outside the exchange and allow delivery or performance of the contract in the future at a fixed today price. Unlike futures,in forward contracts occur the physical implementation of the agreed trade (deliverable subject of the agreement, known as the underlying asset). A forward contract is in terms of time, opposite to the spot contract.
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