“Parisi proceeds to review an equity forward contract held by Quantum. The contract was initiated thirty days ago when the fund expected a large inflow of cash in 60 days. In order to hedge against a potential rise in equity values over this period , Quantum entered into a long forward contract on the UAX 300 Index expiring in 60 days.”
I have difficulty understanding how equity forward contract works. Why do we need to worry about potential rise in equity value? Shouldn’t the value be fixed as per contract?