forwards

(noun)

A non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Related Terms

Examples of forwards in the following topics:

  • Spot Rates, Forward Rates, and Cross Rates

    • Spot & forward rates are settlement prices of spot & forward contracts; cross rates are the exchange rate between two unofficial currencies.
    • A spot contract is in contrast with a forward contract where contract terms are agreed now but delivery and payment will occur at a future date.
    • The settlement price of a forward contract is called a "forward price" or "forward rate. " Depending on the item being traded, spot prices can indicate market expectations of future price movements.
    • In other words, spot rates can be used to calculate forward rates.
    • If the underlying asset is tradeable, the forward price is given by:

  • Types of Exchange Hedges: Forward, Money Market, and Future

    • Forwards, money market instruments, and futures are common instruments used to manage exchange risk.
    • In finance, a forward contract, or simply a forward, is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today.
    • The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into.
    • The same mechanism functioning in forward contracts applies to futures.
    • Forward contracts are very similar to futures contracts, except they are not exchange-traded, or defined on standardized assets.

  • Reaction Quotients

    • By comparing the value of Q to the equilibrium constant, Keq, for the reaction, we can determine whether the forward reaction or reverse reaction will be favored.
    • The reaction quotient can be used to determine whether a reaction under specified conditions will proceed spontaneously in the forward direction or in the reverse direction.
    • If Q < Keq, the reaction will move to the right (in the forward direction) in order to reach equilibrium.
    • The ball in the initial state is indicative a reaction in which Q < K; in order to reach equilibrium conditions, the reaction proceeds forward.
    • Calculate the reaction quotient, Q, and use it to predict whether a reaction will proceed in the forward or reverse direction

  • Overview of Derivatives

    • The most common types of derivatives are forwards, futures, options, and swaps.
    • Products such as swaps, forward rate agreements, exotic options - and other exotic derivatives - are almost always traded in this way.
    • The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into.
    • The difference between the spot and the forward price is the forward premium or forward discount, generally considered in the form of a profit, or loss, by the purchasing party.
    • On the other hand, the forward contract is a non-standardized contract written by the parties themselves.

  • Equilibrium

    • Chemical equilibrium is the state in which the forward reaction rate and the reverse reaction rate are equal.
    • For plenty of reactions, however, the forward reaction is so favored, and the reverse reaction is so negligible, that reactions are written simply in terms of the solid forward arrow, $A\rightarrow B$.
    • However, we will now consider forward/reverse reaction pairs that exist in chemical equilibrium with one another.
    • This lesson introduces equilibrium as a condition where the forward and reverse reaction rates are equal.
    • Recall the relationship between the forward and reverse reaction rates when a reaction is at equilibrium

  • International Financial Securities

    • First form is a forward contract.
    • Furthermore, a forward contract is a tailor-made contract, and international banks usually write forwards for foreign currencies.
    • Another derivative, similar to a forward, is a futures contract.
    • For instance, a forward-forward swap means a firm and a bank exchange two forward contracts with each other.
    • The key to understanding a forward-forward swap, the exchange involves two cash flows, and a forward contract protects each cash flow.

  • The Equilibrium Constant

    • The relationship between forward and reverse reactions in dynamic equilibrium can be expressed mathematically in what is known an equilibrium expression, or Keq expression.
    • Assuming this reaction is an elementary step, we can write the rate laws for both the forward and reverse reactions:
    • However, we know that the forward and reverse reaction rates are equal in equilibrium:
    • If we know the value of Keq, we can draw some conclusions about the thermodynamics of the forward and reverse reactions.
    • A Keq value $\approx$ 1 is indicative that the forward and reverse reactions are about equally favorable, for the ratio of concentrations of reactants and products is close to unity.

  • Introduction to betweenness centrality

    • According to the rules of our bureaucratic hierarchy, I must forward my request through my department chair, a dean, and an executive vice chancellor.
    • I might forward my request to the Chancellor by both channels.

  • Chapter Questions

    • Define a currency swap with a ‘spot against a forward. '

  • Interest Rate Parity Theorem

    • Investors use Interest Rate Parity Theorem to price forward contracts.
    • A forward contract's price originates from interest rate difference between countries.
    • Forward contract issued today at time t for currency delivery on a future specific date on T is F.
    • International investors use arbitrage to price a forward contract.
    • Spot exchange rate is $0.0127 per yen while a one-year forward contract equals $0.0120 per yen.