A forward contract is a financial agreement that involves the purchase or sale of an asset at a predetermined price on a specified date in the future. This type of transaction allows parties to lock in a price and reduce their risk in case of market fluctuations. It is commonly used in the finance industry to hedge against potential losses and manage exposure to market volatility. As a knowledgeable professor, I believe understanding the concept of forward contracts is essential in navigating the complexities of the financial world.
