Factbites
 Where results make sense
About us   |   Why use us?   |   Reviews   |   PR   |   Contact us  

Topic: Forward contract


Related Topics

In the News (Tue 18 Jun 19)

  
  The Economic Purpose of Futures Markets   (Site not responding. Last check: 2007-11-06)
A forward contract is typically a privately negotiated bilateral contract that is not conducted on an organized marketplace or exchange.
The price generally is determined when the contract is entered into, although there are some forward contracts where the parties may agree to transact at a price to be determined later in a manner that is specified on the day the contract is entered into.
Forward contracts are primarily merchandising vehicles, whereby both parties expect to make or take delivery of the commodity on the agreed upon date.
www.cftc.gov /opa/brochures/opaeconpurp.htm   (4104 words)

  
  Forward contract - Wikipedia, the free encyclopedia
A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time.
The forward price of such a contract is commonly contrasted with the spot price, which is the price at which the asset changes hands (on the spot date, usually next business day).
A standardized forward contract that is traded on an exchange is called a futures contract.
en.wikipedia.org /wiki/Forward_contract   (549 words)

  
 [No title]   (Site not responding. Last check: 2007-11-06)
Forward Contract: an agreement between the buyer and seller at time 0 where the two parties agree to the exchange of an asset to be delivered by the seller to the buyer for cash at some specified future date.
The gains and losses on a forward contract are realized at expiration of the contract while holders of futures contracts must recognize the rise and fall in value of the contracts daily as they are marked-to-market.
Forward Contracts and Hedging Interest Rate Risk To understand the usefulness of a forward contract as a hedging vehicle for offsetting the interest rate risk on a financial intermediary, consider an example of a naïve hedge (i.e.
uaeller.eller.arizona.edu /~ruscher/FuturesForwards.doc   (1552 words)

  
 [No title]   (Site not responding. Last check: 2007-11-06)
Forward contract are used during the bid process in order to protect against a rate change before being awarded the project.
Forward contracts are agreements where one party agrees to buy a commodity at a specific price on a specific future date and the other party agrees to make the sale.
A forward contract was one means mentioned for covering the risk, both for the bid process and for periods during the fulfillment of the contract.
www.bsu.edu /classes/benkhaled/Derivatives.bb_record   (15264 words)

  
 forward contract/forward price
A standard forward contract is an agreement to buy or to sell an underlying asset at a predetermined price on a single date in the future, where the terms are initially set such that the contract is costless.
For example, for a corn forward contract, an agreement may be made today to exchange $10,000 in six months (time-to-delivery) for 5,000 bushels of corn of a prespecified grade delivered at a prespecified warehouse.
The forward price should not be confused with the present value of the forward contract, which is zero at inception.
www.in-the-money.com /glossarynet/forward_.htm   (495 words)

  
 Forward contracts   (Site not responding. Last check: 2007-11-06)
A forward contract is a contractual agreement between a buyer and seller today to exchange an asset for cash at a future date, at a rate agreed today.
Forward contracts are individually negotiated between the buyer and seller, such that the amount, the delivery date and the future price are individually set.
Forward contracts are settled in full on the future date, with no periodic adjustment of exposure under the contract, resulting in a greater level of credit risk, than there is with futures contracts which are subject to daily adjustments for movements in market prices (marking to market).
www.clarku.edu /faculty/mcallan/Econ208/Forward_Contracts.html   (146 words)

  
 Futures contract
A futures contract is a form of forward contract that has been standardised for a wide range of uses.
The forward price represents the expected future value of the underlying discounted at the risk free rate - as any deviation from the theoretical price will afford investors a riskless profit opportunity and should be arbitraged away; see rational pricing of futures.
A put is the option to sell a futures contract, and a call is the option to buy a futures contract; for both, the option strike price is the specified futures price at which the future is traded if the option is exercised.
www.brainyencyclopedia.com /encyclopedia/f/fu/futures_contract.html   (1441 words)

  
 Forward Contract as supplied by EagleTraders.com
Forward contracts are especially important in the foreign exchange markets because they allow individuals and firms to protect themselves against foreign exchange risk.
In contrast, a futures contract is traded on an price, including size of the contract, delivery date, grade of commodity, etc. Second, forward contracts are not marked to market each day by an exchange as is the case with futures contracts.
As a result, gains and losses on forward contracts are recognized only when the contract matures, while holders of future contracts must recognize the rise or fall in the value of their contracts as they are marked to market by the exchange.
www.eagletraders.com /advice/securities/forward_contract.htm   (515 words)

  
 St.George Bank - Forward Foreign Exchange
A Forward Exchange Contract is a contract between St.George Bank Ltd and you where the Bank agrees to BUY from you, or SELL to you, foreign currency on a fixed future date, at a fixed rate of exchange.
A Forward Exchange Contract is an agreement between you and the Bank, in which the Bank agrees to Buy or Sell foreign currency to you on a fixed future date, or during a period expiring on a fixed future date, at a fixed rate of exchange.
Forward Margins are a reflection of the interest rate differentials between currencies, and not necessarily a forecast of what the spot rate will be at the future date.
www.stgeorge.com.au /treasury/fx/forward.asp?orc=corporate   (1393 words)

  
 The Social Function of Futures Markets - Mises Institute
A forward contract is an agreement entered into today, in which one party agrees to buy a specified number of items for a predetermined price, called the forward price, at a specific time in the future, the delivery date.
Another difference is that with a futures contract, as the price of the underlying commodity moves and thus changes the market value of the futures contract, the losing party may be required to kick in additional cash to the exchange.
Going the other way, if the forward price were too low, say $30, then a speculator could short sell Microsoft in the spot market, lend the $30 out at 5 percent interest,[1] and at the same time buy a forward contract.
www.mises.org /story/2399   (2560 words)

  
 Foreign Currency Forward Contract Hedges of Exposed Assets/Liabilities
The loss on the forward contract, based on the change in forward rates during the period (0.1015), is discounted at a 6% annual rate and recognized in net income for the fair value hedge, and in OCI for the cash flow hedge ($100,000 x 0.1015 x 0.99502).
The fair value of the forward contract is based on the cumulative change in the forward rate (0.0880).
The gain on the forward contract is the change in the fair value during the period, and is recognized in net income for the fair value hedge, and in OCI for the cash flow hedge.
www.nysscpa.org /cpajournal/2005/405/essentials/p30.htm   (1330 words)

  
 Credit and Finance Risk Analysis - Forward Contract
A Forward contract is considered a derivative product as the contract has no intrinsic value other than that which can be derived from the cash value or income stream value of an underlying asset.
Typically, the contract is between a producer and a merchant; a dealer and an end user; two financial institutions; or a financial institution and a client.
As the forward contract is not exchange traded it is also more flexible than a futures contract: the two parties may define their own delivery date, underlying contract amount, etc.
www.credfinrisk.com /forwards.html   (777 words)

  
 Forward contract -- Facts, Info, and Encyclopedia article   (Site not responding. Last check: 2007-11-06)
forward contracts on (A slippery or viscous liquid or liquefiable substance not miscible with water) oil).
The forward price of such a contract is commonly contrasted with the (The current delivery price of a commodity traded in the spot market) spot price, which is the price at which the asset changes hands (on the spot date, usually next business day).
This can also expressed as the (Click link for more info and facts about Forward price) Forward price, S is again the spot price of the asset, r is the risk-free force of interest and I is the present value of all dividens/coupons/rent/etc. (discounted using r).
www.absoluteastronomy.com /encyclopedia/f/fo/forward_contract.htm   (606 words)

  
 FORWARD CONTRACT
A forward contract is an agreement to buy or sell an asset on a specified date for a specified price.
Forward contracts are very useful in hedging and speculation.
Thus forwards provide a useful tool for both the farmer and the bread factory to hedge their risks.
www.namasthenri.com /derivative/forward.html   (252 words)

  
 International Dairy Foods Association - IDFA - News Center
The provision that limited the first forward contract between a producer and a handler to a maximum of 6 months has been changed to a maximum of 12 months.
Forward contracts must be signed prior to the first day of the month that they are to go into effect.
Each forward contract signed must be accompanied by a disclosure statement signed by the dairy farmer or cooperative on the same date as the contract.
www.idfa.org /news/releases/2000/forwardc.cfm   (787 words)

  
 State Bank of Pakistan - The Central Bank
The number and date of the forward contract should be endorsed by the Authorised Dealers under their seal and signature on all the copies including the originals, even in cases where these are returned to the applicants.
A forward sale may also be made after the receipt of an import bill drawn on usance basis, but such a sale may not provide for delivery beyond the date of maturity of the bill.
In the case of closure of forward exchange contracts, the difference between the booked forward rate excluding the element of usance, if any, and the prevailing spot rate for the counter transaction on the day of the maturity will be recoverable from or payable to the customer, as the case may be.
www.sbp.org.pk /fe_manual/chapters/chapter4.htm   (1532 words)

  
 [No title]
Forward contracts allow farmers to lock in a price or basis for grain they plan to deliver some time in the future.
Forward Cash Contracts ‘allow producers to lock in a flat price for grain they plan to deliver some time in the future’ Many elevator operators offer forward contracts to the local grain producers.
Actually, when an elevator operator offers a forward contract to a producer, as soon as the contract is signed he places pre-harvest hedge to protect his position using the futures markets.
cdp.wisc.edu /agGrains/06-ForwardCash-MPC.doc   (2478 words)

  
 Calforex - Forward Contract Rates   (Site not responding. Last check: 2007-11-06)
A forward rate is calculated by looking at the interest rate difference between the two currencies involved.
What causes the forward contract rate to be higher or lower is the difference in the interest rates between Canada and the United States.
Therefore, when the forward rate is calculated the cost of this interest rate differential is added to the transaction through increasing the rate.
www.calforex.com /fwdrate.html   (210 words)

  
 Standard Forward Contract: Definition
The forward price F, a closely related concept, is the delivery price which on a given date (in general, on or after inception) would set the present value of the payoff on that date to zero.
Also, although the forward contract is designed to have a value of 0 at its inception, only by accident will it have a value of 0 subsequently.
A standard forward contract is an agreement in which the "buyer" agrees to buy from the "seller" an "underlying asset" for a fixed price ("delivery price") during a future period of time ("delivery period"), where the terms are initially set so that its present value is zero.
www.in-the-money.com /presentation/sld035.htm   (565 words)

  
 Commonwealth Foreign Exchange - The Forward Contract   (Site not responding. Last check: 2007-11-06)
A forward contract is a non-speculative agreement established between the importer and Commonwealth Foreign Exchange, whereby a price is fixed for the delivery of a specific foreign currency at some time in the future.
The forward contract may be purchased for as short as thirty days to as long as one year out.
The forward contract is done in the same manner as a spot transaction.
www.comfex.com /services/fw.html   (573 words)

  
 Key financial instruments -
The most common Forward contract is a Forward foreign exchange contract which is a contract to buy a specified amount of currency A for a specified amount of currency B at a specified date in the future and at a specified exchange rate.
A forward outright is the classic forward contract entered into by a corporation to exchange currencies at an agreed rate in the future.
The Break Forward was a combination of a forward contract to buy currency A and sell currency B at a fixed forward rate and an attached optional contract, an option, to do the opposite, sell currency A and buy currency B, at a different rate, the break rate.
www.dc3.co.uk /keyinstruments.htm   (10684 words)

  
 The Break Forward- article by Warren Edwardes, CEO, Delphi Risk Management
A Break Forward contract is a forward contract at a Forward rate that permits the holder to break or unwind the contract with an opposite transaction at another rate, the Break rate.
Such contracts were distinguished from conventional forward contracts in that the purchaser of a currency option is merely obliged to deliver an up-front premium to ensure protection against downside currency risk.
Those whose performances are measured relative to the forward rate and perceive risk according to that measurement will be tempted towards a smaller loading Break-Forward contract, such as that depicted by S or in extreme circumstances a forward contract.
www.dc3.co.uk /breakforward.htm   (5160 words)

  
 Legal Issues Involving Cash Forward Grain Contracts
Contracts beyond those limits are generally not enforceable unless they are in writing and signed by the parties against whom enforcement is sought.
Forward contracts are of several types, but one of the most often used varieties is a sale agreement that binds the farmer to deliver a specified quantity of grain at a future date.
Forward contracting can be a sound marketing tool provided that the amount of the crop forward contracted is limited, in general, to a modest proportion of a normal crop above crop insurance carried.
trmep.tamu.edu /cg/factsheets/rm7-8.html   (2400 words)

  
 What is the difference between forward and futures contracts?
Forward contracts, on the other hand, are private agreements between two parties and are not as rigid in their stated terms and conditions.
Because forward contracts are private agreements, there is always a chance that a party may default on its side of the agreement.
On the other hand, forward contracts are mostly used by hedgers that want to eliminate the volatility of an asset's price, and delivery of the asset or cash settlement will usually take place.
www.investopedia.com /ask/answers/06/forwardsandfutures.asp   (387 words)

  
 How to Contract - Alto Dairy
Signing this contract does not require you to use the forward pricing program, only that you are then capable of contracting at any time thereafter.
Contract sizes range from a minimum contract of 10,000 pounds, with additional contract weights being placed in 10,000-pound increments.
Contract price quotes are available by calling (800) 493-2479 extension 1388 or by accessing our Forward Contracting price quotes on the Web page.
www.altodairy.com /producers/contracts/howto   (466 words)

  
 Forward Contract
A forward may be cash settled, in which case the underlier and payment never exchange hands.
Instead, the contract settles with a single payment for the market value of the forward at settlement, as given by [1].
Forwards are a convenient vehicle for hedging or speculation.
www.riskglossary.com /articles/forward.htm   (971 words)

  
 WWWFinance - Forward and Future Contracts
Since forward contracts are traded over-the-counter rather than on exchanges, the example illustrates a contract between a user and a producer of the underlying commodity.
In some circumstances, however, a futures contract is perfectly equivalent to a forward contract in which case the two contracts must have the same value.
Since forward contracts are relatively easy to value using a no-arbitrage argument, this provides a convenient way of valuing a futures contract.
www.duke.edu /~charvey/Classes/ba350_1997/futures/lecture.htm   (7190 words)

Try your search on: Qwika (all wikis)

Factbites
  About us   |   Why use us?   |   Reviews   |   Press   |   Contact us  
Copyright © 2005-2007 www.factbites.com Usage implies agreement with terms.