An informal agreement traded through a broker-dealer network to buy and sell specified assets, typically currency, at a specified price at a certain future date. Compare with futures contract.
- Risk tools include forward contracts, minimum price contracts, futures, options, crop insurance, hail insurance and other risk management tools.
- Such options include weather insurance and buying energy futures, derivatives or forward contracts that require an organization to take title to, or else sell, blocks of energy.
- For the previous 15 years, with only a few exceptions, five-month forward contracts traded in a narrow range around $20 per barrel.
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