Forward contract: Forward example: forward contract settlement: forward contract risk:

A forward contract is a type of derivative contract that obligates the buyer to purchase an underlying asset at a predetermined price on a future date.

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The buyer and the seller of a forward contract agree on the terms of the contract, including the price and delivery date, at the time the contract is entered into.

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The forward contract is the simplest form of derivative. Consider the forward contract as the older form of future contract.

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