Common Contracts
1 similar Forward Contract contracts
EC3070 FINANCIAL DERIVATIVESForward Contract • January 28th, 2009
In a forward contract, a party agrees to buy or sell an asset at a given price at a future date τ . The party that agrees to buy the asset, is taking a long position. The party that is selling is taking a short position. The spot price Sτ is the price in the open market of the asset of time τ . The delivery price Kτ is the price agree in the forward contract for the transaction that is to be enacted at time τ , when the money is paid and the delivery is taken.
