The buyer of a forward contract:
A)Will be taking delivery of the good(s) today at today's price.
B)Will be making delivery of the good(s) at a later date at that date's price.
C)Will be making delivery of the good(s) today at today's price.
D)Will be taking delivery of the good(s) at a later date at pre-speciﬁed price.
E)Both A or D.

Question

Quizplus · Accepted Answer

The buyer of a forward contract will be taking delivery of the good(s) at a later date at a pre-specified price. This is the basic function of a forward contract, where the buyer locks in a price with the seller for delivery of goods at a future date. Option A is not correct because the buyer is not taking delivery of the goods today, but at a future date. Option B is not correct because the buyer is not making delivery of the goods, but receiving them. Option C is not correct because the delivery is not happening today. Option E is not correct because option A is incorrect.

The Buyer of a Forward Contract