An agreement between two parties to exchange a specified amount of a commodity,security,or foreign currency at a specified date in the future with the price or exchange rate being set now is referred to as a(n)
A) interest rate swap.
B) forward contract.
C) futures contract.
D) option.

Question

Quizplus · Accepted Answer

A forward contract is an agreement between two parties to exchange a specified amount of a commodity, security, or foreign currency at a specified date in the future with the price or exchange rate being set now. This is in contrast to a futures contract, which is similar but traded on an exchange and standardized in terms of contract size and expiry dates. Interest rate swaps and options are also financial contracts but do not involve an exchange of a specified asset at a future date.

An Agreement Between Two Parties to Exchange a Specified Amount