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This morning a cereal maker agreed to pay a farmer $4.40 a bushel for 5,000 bushels of wheat that the farmer will ship to the factory four months from now. What is this legally binding agreement called?

Respuesta :

Answer:

Forward contract

Explanation:

Under a forward contract the contract is made for a future supply of goods and services, and the rate is predetermined in present.

Further, the forward contract is the contract made for hedging of funds or for speculation of funds, it basically is used for hedging as the future price of goods are not specified at present, and thus the predetermined rate helps in gaining extra profits through hedging.

Thus, the correct word the future date contract at predetermined rate = Forward contract.

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