MANAGEMENT

Detailed explanation-1: -A forward contract is signed between party A and party B face to face (or ‘over the counter’) about a future transaction of an asset. Both parties use the contract to establish and agree on the fundamentals: the price, the quantity, and the date of delivering the asset.

Detailed explanation-2: -What Is a Forward Contract? A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging.

Detailed explanation-3: -A forward contract, often shortened to just forward, is a contract agreement to buy or sell an asset at a specific price on a specified date in the future. Since the forward contract refers to the underlying asset that will be delivered on the specified date, it is considered a type of derivative.

Detailed explanation-4: -Currency forward contracts are primarily utilized to hedge against currency exchange rate risk. It protects the buyer or seller against unfavorable currency exchange rate occurrences that may arise between when a sale is contracted and when the sale is actually made.