What is a forward contract?

A forward contract is a privately negotiated agreement between two parties to buy or to sell an asset at a specified price on a future date. Under forward contract, there is an obligation for the buyer to pay for what has been bought and receive delivery thereof as per contract, and for the seller to give…

What are FOB value and CIF Value?

The export order received by an exporter from a foreign buyer may be on FOB terms, CIF firms, and CIP or CPT terms are among the most common of the 12 international commerce terms (incoterms) established by the International Chamber of Commerce (ICC) in 1936. These are international shipping agreements used in the transportation of…

What is arbitrage?

When an entity taking advantage of two or more markets of a price difference goes for simultaneous purchase and sale of a financial instrument on different markets. This is called the Arbitrage. The trader involved in arbitrage makes profit from the difference of prices at different markets. For example: The exchange rate in London is…