Why Is a Forward Contract Also Known as a Derivative

question 38

Essay

Why is a forward contract also known as a derivative asset?

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Definitions:

Capacity Allocation

Involves the strategic distribution of resources and workloads across production or service delivery systems to optimize output and efficiency.

Facility Location

Involves determining the most optimal placement for a firm's manufacturing or distribution facilities to minimize costs and maximize service quality.

Facility Location Decisions

The process of determining the most suitable locations for production or service facilities based on factors such as cost, access to markets, and logistics.

Tariffs

Taxes or duties imposed on imported or, less commonly, exported goods to control trade flows or raise government revenue.