forward premium

forward premium
A currency trade at a forward premium when its forward price is higher than its spot price. Bloomberg Financial Dictionary

Financial and business terms. 2012.

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  • Forward premium — The term forward premium, as used in currency trading, refers to the premium (or discount) resulting from a forward contract to be executed in the future at a forward rate. The premium is calculated as follows:((forward rate spot rate)/spot… …   Wikipedia

  • Forward Premium — When dealing with foreign exchange (FX), a situation where the spot futures exchange rate, with respect to the domestic currency, is trading at a higher spot exchange rate then it is currently. A forward premium is frequently measured as the… …   Investment dictionary

  • Forward premium — A currency trades at a forward premium when its forward price is higher than its spot price. The New York Times Financial Glossary …   Financial and business terms

  • Forward premium anomaly — The forward premium anomaly in currency markets refers to the well documented empirical finding that the domestic currency is expected to appreciate when domestic nominal interest rates exceed foreign interest rates. This is puzzling because… …   Wikipedia

  • Forward premium —   Positive forward points …   International financial encyclopaedia

  • premium — consideration paid for an insurance policy. Glossary of Business Terms (1) The additional payment allowed by exchange regulation for delivery of higher than required standards or grades of a commodity against a futures contract. (2) In speaking… …   Financial and business terms

  • Forward contract — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Premium — (1) Amount paid for a bond above the par value. (2) The price of an option contract; also, in futures trading, the amount the futures price exceeds the price of the spot commodity. Related: inverted market premium payback period. Also called… …   Financial and business terms

  • Forward Margin —    The discount or premium between the spot and forward rates for a forward foreign exchange transaction. It represents the interest rate differential between the two currencies traded.    ► See also Discount, Premium …   Financial and business terms

  • Forward start option — A forward start option is an option that commences at some specified future date with an expiration further in the future. It is essentially a forward on an option, only the premium is paid in advance. [ [… …   Wikipedia

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