Hi dh5007 and thank you for the question.
The website below explains in quite some detail numerous terms in the
financial area, and explains the difference between "forwards" and
"futures" thus:
"Forward/Forward Deposits
An agreement to place a deposit with an FI at a specified future time
on specified conditions. Unlike the case in and FRA, where net
settlement based on market interest rates occurs, in a forward
forward, the deposit is actually placed.
Forward Purchase (Sale) Agreement
A forward purchase or sale agreement (usually just called a "forward")
is an over the counter agreement between two parties, a buyer and a
seller, to effect the sale of a specific amount of a specific item at
a specific date in the future for a specific price, determined at the
time of concluding the forward agreement. The item may be bonds,
stocks, foreign exchange, commodities, or any other good or service.
In financial markets very liquid forward markets are in foreign
exchange and (to a lesser extent) commodities.
Forward Rate Agreement (FRA)
An FRA is a forward agreement in deposits used to hedge against or
speculate in interest rate risk where delivery does not take place but
where cash flow settlement occurs on the notional deposit placement
day.
Frequency of Loss The probability of occurrence of a loss. In
calculating the expected value of an insurance policy (or credit
risk), actuarial value of an insurance policy, one needs joint
estimates of the severities of losses and the frequency of each such
loss.
Futures Contract
A pure bet made through a standardized (with respect to quality,
quantity, timing of delivery, etc.) contract(s) at an exchange between
two members (who may be acting for their clients) one who longs and
one who shorts the contract(s). The contractors face only the credit
risk of the exchange, which intermediates the bet and must maintain
margin accounts into and out of which is a daily marking to market of
the contract. A futures may be considered to be like forward
contract, intermediated by an exchange where there is recontracting
daily.
Futures Option
A put or call option contract that, when exercised, results in the
delivery of a futures contract on the underlying asset"
http://www.business.mcmaster.ca/finance/thomas/glossary/glossary.htm
Thank you for the question, and if you need any clarification of my
answer do not hesitate to ask.
Best regards
THX1138
Search strategy:
"financial services" "a forward is"
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