Forward Margin

A A A

DEFINITION

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.

INVESTOPEDIA EXPLAINS

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.


RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. An exchange rate ...
  2. Spot Rate

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

    A delivery of the underlying asset at the date agreed upon in a forward contract. ...
  4. Currency

    A generally accepted form of money, including coins and paper notes, which is ...
  5. Future Value - FV

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

    1. The total cost of an option. 2. The difference between the higher price paid ...
  7. Discount

    The condition of the price of a bond that is lower than par. The discount equals ...
  8. Forward Premium

    When dealing with foreign exchange (FX), a situation where the spot futures ...
  9. Forward Discount

    In a foreign exchange situation where the domestic current spot exchange rate ...
  10. Bid Wanted

    An announcement by an investor who holds a security that he or she is looking ...
Related Articles
  1. Currency Exchange: Floating Rate Vs. ...
    Forex Education

    Currency Exchange: Floating Rate Vs. ...

  2. Profiting From A Weak U.S. Dollar
    Forex Education

    Profiting From A Weak U.S. Dollar

  3. Dual And Multiple Exchange Rates 101
    Forex Education

    Dual And Multiple Exchange Rates 101

  4. Taking Stock Of Discounted Cash Flow
    Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

  5. 10 Tips For Choosing An Online Broker
    Options & Futures

    10 Tips For Choosing An Online Broker

  6. What is the difference between options ...
    Options & Futures

    What is the difference between options ...

  7. What is the difference between forward ...
    Investing

    What is the difference between forward ...

  8. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

    By
  9. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  10. Megatrends For Maximum Profits
    Active Trading Fundamentals

    Megatrends For Maximum Profits

comments powered by Disqus
Hot Definitions
  1. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  2. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  3. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  4. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  5. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  6. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
Trading Center