Definition of forward rate in English English dictionary
The future interest rate of a bond inferred from the term structure, especially from the yield curve of zero-coupon bonds, calculated from the growth factor of an investment in a zero held until maturity
A projection of future interest rates calculated from either spot rates or the yield curve
The rate at which a foreign exchange contract is struck today for settlement at a specified future date
the dollar amount that a commodity, currency, or bond will cost on future delivery
Forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market Therefor the forward points are subtracted from the spot rate Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate
Forward rates are quoted in terms of forward points , which represents the difference between the forward and spot rates In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market Therefor the forward points are subtracted from the spot rate Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate
The rate at which forward transactions (a transaction at a future date for a fixed price) are being made
forward rate
Hyphenation
for·ward rate
Turkish pronunciation
fôrwırd reyt
Pronunciation
/ˈfôrwərd ˈrāt/ /ˈfɔːrwɜrd ˈreɪt/
Etymology
[ 'for-w&rd, also 'fO ] (adjective.) before 12th century. Middle English, from Old English foreweard, from fore- + -weard -ward.