What does 'future' refer to in a financial context?

In a financial context, the term 'future' most accurately refers to a commitment to an additional transaction that limits risk. This aligns closely with the concept of futures contracts, which are standardized agreements to buy or sell an asset at a predetermined future date and price. These contracts are used by investors and companies to hedge against price fluctuations in the underlying assets, effectively managing risk in volatile markets.

By entering into a futures contract, parties can lock in prices, thereby minimizing the impact of adverse price movements on their financial positions. This characteristic is fundamental to the purpose of futures in financial markets, making option A the correct understanding of what 'future' signifies in financial terminology. The emphasis here is on risk management rather than the potential for immediate returns, documentation of outcomes, or merely forecasting market trends, which are not central to what futures represent in the financial landscape.