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In a forward contract, the buyer and seller agree to buy or sell an underlying asset at a price they both agree on at an established future date. This price is called the forward price. This price is calculated using the spot price and the risk-free rate. The former refers to an asset's current market price.
Forward contracts can involve the exchange of foreign currency and other goods, not just commodities. For example, if oil is trading at $50 a barrel, the company might sign a forward contract with its supplier to buy 10,000 barrels of oil at $55 each every month for the next year.
A forward contract is a private and customizable agreement that settles at the end of the agreement and is traded over the counter. A futures contract has standardized terms and is traded on an exchange, where prices are settled on a daily basis until the end of the contract.
FORWARD CONTRACTS It is a contract between the bank and its customers in which the exchange/conversion of currencies would take place at future date at a rate of exchange in advance under the contract.