Forward contracts do not require an upfront premium.

Name: Forward contracts do not require an upfront premium.
Brand: Quizplus
Rating: 4.9 (37 reviews)

Question

Quizplus · Accepted Answer

Forward contracts do not require an upfront premium. Instead, the buyer and seller agree on a future price and settle the transaction at a later date, typically at the time of delivery or maturity. However, the lack of an upfront premium means that there is a higher degree of counterparty risk and no guarantee of market liquidity for the contract.

Forward Contracts Do Not Require an Upfront Premium