An agreement between a buyer and a seller at time 0 to exchange a pre-specified asset for cash at a specified later date is the characteristic of a
A)spot contract.
B)forward contract.
C)futures contract.
D)put options contract.

Question

Quizplus · Accepted Answer

A forward contract is an agreement between a buyer and a seller to exchange a pre-specified asset for cash at a specified later date. Spot contracts involve an immediate exchange of cash and an asset. Futures contracts are similar to forward contracts but are traded on exchanges, and put options contracts give the buyer the right, but not the obligation, to sell an asset at a pre-specified price on or before a pre-specified date.

An Agreement Between a Buyer and a Seller at Time