Forward premium and forward discount?
Forward premium means that the forward exchange rate of a currency is higher than the spot exchange rate. ?
Forward discount means that the forward exchange rate is lower than the spot exchange rate. ?
If the forward premium and forward discount are equal, it is called forward parity. ?
The relationship between forward transaction price, spot transaction price and premium:?
Forward transaction price = spot transaction price+premium (or "-"discount)
Extended data:
Forward exchange rate is based on spot exchange rate, that is, it is expressed by "premium", "discount" and "parity" of spot exchange rate. Generally speaking, the pricing method of forward exchange rate is only to mark forward premium or discount.
Forward discount situation
Generally speaking, the pricing method of forward exchange rate is only to mark forward premium or discount.
1. In the case of direct quotation, if the forward exchange rate is a forward discount, it is the forward exchange rate minus the spot exchange rate discount.
2. In the case of indirect pricing method, on the contrary, if the forward exchange rate is a forward discount, it is necessary to add the discount number to the spot exchange rate, which is the forward exchange rate.
Baidu Encyclopedia-Forward Premium