Definition:
Forward Contract
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A forward contract is an agreement that can be used when an organization anticipates a future need for foreign currency or expects to receive foreign currency.In a forward contract, a financial institution negotiates a contract with a third party on behalf of the organization, fixing the price and date at which currency currency will be exchanged.
Forward contracts are a derivative instrument often used to hedge against currency risk.
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October 08, 2010 | Adam Fish
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