FEATURES OF FORWARDS

abhishreshthaa

New member
Forwards

Forwards contract are customized contract between two entities to buy or sell an asset on a specified future date for a specified price.

Features of Forward

  • Contract between two parties.

  • Price decided today.

  • Quantity & Quality decided today.

  • Settlement will take place in future.

  • No Margins are generally payable by any of the parties.

  • Customized Contract

  • Traded in the over-the-counter market

EXAMPLE:

  • An investor enters into a forwards contract to buy 100 Infosys shares at Rs. 2000 each for delivery 3 months hence .

  • If the price of Infosys shares 3 months hence , is Rs. 2200 , the investor gains & if it falls below Rs 2000 , he loses.

LIMITATIONS:

Counter party risk.


Lack of centralizing of trading.


Price not being transparent.
 

jiten005

Banned
Forwards

Forwards contract are customized contract between two entities to buy or sell an asset on a specified future date for a specified price.

Features of Forward

  • Contract between two parties.

  • Price decided today.

  • Quantity & Quality decided today.

  • Settlement will take place in future.

  • No Margins are generally payable by any of the parties.

  • Customized Contract

  • Traded in the over-the-counter market

EXAMPLE:

  • An investor enters into a forwards contract to buy 100 Infosys shares at Rs. 2000 each for delivery 3 months hence .

  • If the price of Infosys shares 3 months hence , is Rs. 2200 , the investor gains & if it falls below Rs 2000 , he loses.

LIMITATIONS:

Counter party risk.


Lack of centralizing of trading.


Price not being transparent.

Thanks my friend for providing such a nice information on FEATURES OF FORWARDS. I also found something important which might be of your uses so uploading here a presentation on FEATURES OF FORWARDS. Please download and check it and let me know your feedback.
 

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