A forward contract is:
A) A debt instrument.
B) The right to sell something in the future.
C) An obligation to buy or sell something in the future.
D) The right to buy something in the future.

Question

Quizplus · Accepted Answer

A forward contract is an agreement between two parties to buy or sell an asset or commodity at a set price and date in the future. It is a binding agreement where both parties are obligated to fulfill the terms of the contract, unlike an option contract which gives the holder the right to buy or sell but not the obligation. Therefore, the correct choice is C.

A Forward Contract Is