A personalised contract between two parties whereby one party agrees to sell a bale of wool to another party in the future at a price determined today is an example of a:
A)futures contract.
B)forward contract.
C)wool option.
D)spot contract.

Question

Quizplus · Accepted Answer

A forward contract is a personalised agreement between two parties where one party agrees to sell an asset (in this case, a bale of wool) to the other party at a predetermined price on a future date. The price is determined at the time of entering into the contract, making it different from a futures contract where the price is determined by the market. Wool options and spot contracts are not applicable in this scenario.

A Personalised Contract Between Two Parties Whereby One Party Agrees