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What Is a Forward Contract?

By Kristi Waterworth – Updated Sep 23, 2024 at 2:42PM

Key Points

  • Forward contracts let parties lock in asset prices, potentially leading to gains if market prices differ at expiry.
  • These contracts are custom, non-exchange traded agreements, offering less transparency compared to futures.
  • Buyers or sellers in forward contracts might pay more or less than market rates, depending on future price changes.
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