Discount on forward rate
Discount on forward rate is the difference between the forward rate and the spot rate when the forward rate is below the spot rate.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Discount on forward rate. Occurs when the forward exchange rate differs from the spot rate. When the forward rate is below the spot rate, the forward rate is said to be at a discount.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Discount on forward rate. The situation when the spot rate is less than the forward rate.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
