When I study the forward contract, I read that the forward price must be the price that makes the the value of the contract zero.

I searched for the answer, but there are many versions.

Some say it is because the assumption that the information is available to all, so the buyers and the sellers must be indifferent of whether long or short the contract.

Some say it is because of the no-arbitrage principle. But I still cannot fully understand it.

Why cannot two people sign a forward contract, one pays another some money while setting the forward price?


closed as off-topic by SRKX Oct 22 '15 at 4:26

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "Basic financial questions are off-topic as they are assumed to be common knowledge for those studying or working in the field of quantitative finance." – SRKX
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  • $\begingroup$ This is a basic finance question and hence it is off-topic here. You can have a look here for an explanation of the no-arbitrage argument. Note that you could agree with some counterparty to buy the underlying for a different price and exchange for cash when you sign, that's not a problem, it's just not what we call the forward price. $\endgroup$ – SRKX Oct 22 '15 at 4:26

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