A forward contract:
A) requires that payment be made in full when the contract is originated.
B) provides the buyer with an option to buy an asset on the settlement date at the forward price.
C) is a binding agreement on both the buyer and the seller and nets out as a zero sum game.
D) is marked to the market daily at the seller's request.
E) allows for immediate delivery at an agreed upon price which is to be paid on the settlement date.

Question

Quizplus · Accepted Answer

A forward contract is a binding agreement between a buyer and a seller, where both parties are obligated to transact at a specified future date and price. The value gained by one party is equal to the loss of the other, making it a zero-sum game.

A Forward Contract