Following are the differences between Spot Contract And Forward Contract
Spot Contract
- A spot contract is one where the contract is performed immediately by both the parties (i.e., payment by the buyer and the delivery of goods by the seller take place instantly).
- In spot transaction, there is no counter party risk.
- A spot contract can arise even between the parties not knowing each other.
- In a spot contract, hedging and speculation are not possible.
Forward Contract
- In forward contract the contract is performed at a future date.
- In a forward contract, there is always a counter-party risk.
- The parties to a forward contract must know each other.
- In a forward contract, hedging and speculation are possible.
To read more about Spot Contract visit 👇 https://freebird.data.blog/2022/07/06/spot-contract/
To read more about Forwards visit 👇https://freebird.data.blog/2022/06/10/forwards/
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