Political Science, asked by narayanigupta3983, 1 year ago

Sale and purchase of forward contract levy and collection

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Answered by aashi2701
1

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Futures and forwards both allow people to buy or sell an asset at a specific time at a given price, but forward contracts are not standardized or traded on an exchange. They are private agreements with terms that may vary from contract to contract. Also, settlement occurs at the end of a forward contract.

Unlike standard futures contracts, a forward contract can be customized to any commodity, amount and delivery date. A forward contract settlement can occur on a cash or delivery basis. Forward contracts do not trade on a centralized exchange and are therefore regarded as over-the-counter (OTC) instruments.Futures contracts are traded on exchanges, making them standardized contracts. Forward contracts are private agreements between two parties to buy and sell an asset at a specified price in the future. ... Forward contracts are settled on one date at the end of the contract.

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