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Forwards
Definition
A forward contract is a private instrument between two parties in which one party, the buyer, agrees to buy form the other party, the seller, an underlying asset at a later date for a specified price established at the outset. Forwards are often associated with swaps and are a sophisticated financial instrument used by institutional investors.
Using the term Forwards :
The CFO used forwards in order to lock-in his price of borrowing in the future. He used a forward rate agreement (FRA) to do this -- a common practice.
Pay Special Attention To :
Counterparty risk is one of the larger risks you face in the forwards market at it is a less regulated unit and you will suffer if you are the buyer and seller defaults on his obligations.
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Related terms
Derivatives , Futures , Trading Places
'Forwards' appears in the definitions of these other terms:
Currency Risk
