Forward Margin


DEFINITION of 'Forward Margin'

The difference between the spot rate and the estimated future rate for a certain commodity. The forward margin on foreign currency, for instance, would typically be specified as number of points over or under the spot rate.

BREAKING DOWN 'Forward Margin'

The difference between the two rates can either be a premium or a discount depending if its above or below the spot rate. If you add or subtract the forward margin to the spot rate, you would get the forward rate.

  1. Currency

    Currency is a generally accepted form of money, including coins ...
  2. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  3. Spot Rate

    The price that is quoted for immediate settlement on a commodity, ...
  4. Forward Delivery

    A delivery of the underlying asset at the date agreed upon in ...
  5. Future Value - FV

    The value of an asset or cash at a specified date in the future ...
  6. Premium

    1. The total cost of an option. 2. The difference between the ...
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