2
Forward Contracts
LEARNING OBJECTIVES
After completing this chapter, you will be able to answer the following questions:
- What are forward contracts?
- How are forward contracts used?
- How are commodity forward contracts priced?
- What are currency forward contracts?
- What are the uses of currency forward contracts?
- How are currency forward contracts priced?
- What is a forward rate agreement?
- What are the uses of forward rate agreements?
The origin of forward contracts can be traced back to more than 2000 years when farmers and merchants used forward contracts to reduce the risk of the price of agricultural goods moving against them. There is no clear indication as to when the first forward contract was initiated, but forward contracts in some form ...
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