Fixed Income Forward

For this one, we’ll take the last part first. "Forward," in this situation, refers to an event taking place in the future...like you're fast-forwarded to the end of a movie, or at least to the good parts. Fixed income, meanwhile, refers to a security that pays a fixed amount on a set schedule, bonds being the most prominent example.

So a fixed income forward represents a futures contract for a fixed income security. For instance, an investor could set up a fixed income future to buy $300,000 in 5-year Treasury notes at a set price. Once the contract expires, they will pay their $300,000 and receive the appropriate 5-year notes.

A fixed income forward allows an investor to lock in a price for her bonds.