Forward-forward agreement

In business and contract law, a forward-forward agreement (FFA) is a form of forward rate agreement in which party A agrees to lend party B the m₁ amount of money, at future time t₁. In return, B will pay to A a larger monetary amount m₂ at time t₂ > t₁. The name "forward-forward agreement" derives from the fact that both issuing and repayment of the loan take place in the future. A regular forward rate agreement lends the money at once. A quoted forward rate is associated with every forward-forward agreement. This can be thought of as the interest rate earned by party A for lending the money to B.^[1]

See also

• Futures contract
• Forward contract
• Arbitrage

References

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