The forward contract is an agreement between 2 parties in which one party, the buyer, agrees to buy from the other party, the seller, an underlying asset at a futuredate at a price established at the start.
The parties to the transaction specify the forward contract's terms and conditions, such as when and where delivery will take place and the precise identity of the underlying.
The contract is said to be customized.
Each party is subject to the possibility of that the other party wil default.(Counter Party Risk)
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