Which of the following is the best definition of forward contract?

Multiple Choice

Long-term financial risk arising from permanent changes in prices or other economic fundamentals.

A forward contract with the feature that gains and losses are realized each day rather than only on the settlement date.

A legally binding agreement between two parties calling for the sale of an asset or product in the future at a price agreed upon today.

An agreement that gives the owner the right, but not the obligation, to buy or sell a specific asset at a specific price for a set period of time.

Reducing a firm's exposure to price or rate fluctuations.

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Solution The correct answer is A legally binding agreement between two parties calling f... View the full answer