📝 One-liners · 66 cards
FORWARD CONTRACT
What is a forward contract in the context of foreign exchange?
A forward contract is a customized agreement between two parties to buy or sell a specified amount of foreign currency at a predetermined exchange rate on a future date. It is used to hedge against exchange rate risk.
What is the maximum tenor for a forward contract in India as per RBI guidelines?
Generally up to one year, extendable in some cases.
How does a forward contract differ from a futures contract?
A forward contract is an OTC (over-the-counter) instrument that is privately negotiated, non-standardized, and not traded on an exchange, whereas a futures contract is standardized and traded on an organized exchange.
What is the difference between a 'fixed date forward' and an 'option forward' contract?
Fixed date has a single maturity date; option forward allows delivery within a range.
🔒
Unlock 66 revision one-liners
Interactive flashcard deck — flip every card to drill questions and answers, mark the ones you got wrong, and revise smarter for FORWARD CONTRACT.
🪙
Unlock cost
300 coins
30-day access · re-unlocks free for 30 days