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LSDefine
Simple English definitions for legal terms
forward market
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A quick definition of forward market:
A forward market is a place where people can buy and sell things that they will get in the future. For example, if someone wants to buy a car that will be made in six months, they can agree to buy it now in the forward market. This is similar to the futures market, where people can buy and sell things that will be delivered in the future. The forward market is a type of market where people can make deals for things that they will get later.A more thorough explanation:
A forward market is a type of futures market where contracts are made to buy or sell a commodity or financial instrument at a future date. It is a market where buyers and sellers agree on a price today for a transaction that will take place in the future.
For example, a farmer may enter into a forward contract to sell their crop to a buyer at a fixed price six months from now. This allows the farmer to lock in a price and reduce their risk of price fluctuations in the future. Similarly, a company may enter into a forward contract to buy a certain amount of foreign currency at a fixed exchange rate in the future to hedge against currency fluctuations.
The forward market is used by businesses and investors to manage risk and protect against price volatility. It allows them to plan ahead and make informed decisions based on future prices.