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Forward exchange

Definition:

A type of foreign exchange transaction whereby a contract is made to exchange one currency for another at a fixed date in the future at a specified exchange rate. By buying or selling forward exchange, businesses protect themselves against a decrease in the value of a currency they plan to sell at a future date.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Insurance

Guarding against property loss or damage by making payments in the form of premiums to an insurance company, which pays an agreed-upon sum to the insured in the event of loss.

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