Forward Contracts: CNBC Explains
By: CNBC Explains
Forward contracts are a mainstay in business, helping companies hedge risk and avoid volatility. Why and how do businesses use forward contracts? Salman Khan of the Khan Academy explains, using a simplified example.
From this video, you’ll understand:
- The reasons for creating forward contracts
- How businesses use forward contracts
- How forward contracts help avoid volatility
Yield curves help investors understand the relationship between bonds of differing time horizons to maturity. Understanding the yield curve is important to investors because easily comparing yields allows them to understand their return on investment and make investment decisions based upon these future payouts.
