If a long agrees to buy a specified asset from a short at a specified future date for a specified price,the result is a(n):

Question

Quizplus · Accepted Answer

A forward contract is an agreement between a buyer and a seller to exchange an asset at a future date for a specific price, which is negotiated at the time of the agreement. This type of contract is commonly used in commodities, currencies, and other financial instruments. A futures contract is similar to a forward contract but is traded on an exchange and may have standardized terms. An option contract gives the owner the right, but not the obligation, to buy or sell an asset at a certain price at a certain time. Therefore, the correct answer is B, a forward contract.

If a Long Agrees to Buy a Specified Asset from a Short