Forward Premium

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Dictionary Says

Definition of '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 difference between the current spot rate and the forward rate, but any expected future exchange rate will suffice.
Investopedia Says

Investopedia explains 'Forward Premium'

It is a reasonable assumption to make that the future spot rate will be equal to the current futures rate. According to the forward expectation's theory of exchange rates, the current spot futures rate will be the future spot rate. This theory is routed in empirical studies and is a reasonable assumption to make in the long term.
Search results for

'Forward Premium'

  • Using Interest Rate Parity To Trade Forex

    http://www.investopedia.com/articles/forex/08/interes-rate-parity.asp
    ... If this difference (forward rate – spot rate) is positive, it is known as a forward
    premium; a negative difference is termed a forward discount. ...

  • CFA Level 1 Study Guide - Global Economic Analysis - Forward ...

    http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/forward-market.asp
    ... 5.11 Spot Market Calculations; 5.12 Forward Market Calculations; 5.13 Interest
    Applications; ... 15.20 Currency Forward Contracts; 15.21 Futures vs. ...

  • Progressive's Premium Is Well Deserved

    http://stocks.investopedia.com/stock-analysis/2011/Progressives-Premium-Is-Well-Deserved-PGR-BRK-A-BRK-B-ALL-MCY0817.aspx
    ... But based on profit and underwriting consistency, as well as the ability to continue
    to gain market share going forward, Progressive's premium is well deserved ...

  • CFA Level 1 Study Guide - Portfolio Management - The Risk Premium ...

    http://www.investopedia.com/exam-guide/cfa-level-1/portfolio-management/risk-premium.asp
    ... 5.11 Spot Market Calculations; 5.12 Forward Market Calculations; 5.13 Interest
    Applications; ... 15.20 Currency Forward Contracts; 15.21 Futures vs. ...

  • The Equity-Risk Premium: More Risk For Higher Returns

    http://www.investopedia.com/articles/04/012104.asp
    ... above a safe investment should we expect for the stock market going forward? Academic
    studies tend to arrive at lower equity risk premium estimations - in the ...

  • Calculating The Equity Risk Premium

    http://www.investopedia.com/articles/04/020404.asp
    ... are going to hold going forward. Clearly, this is just a guess! If we could predict
    valuation changes, the full form of the equity risk premium model would ...

  • Exploit Market Inefficiencies With Pair Trades

    http://stocks.investopedia.com/stock-analysis/2010/Exploit-Market-Inefficiencies-With-Pair-Trades-ABC-CAH-MCk-FCX-BHP0806.aspx
    ... Located in Australia, with assets in Australia, Americas and Africa, BHP, at 19x
    forward P/E, tends to trade at a premium to its peers (trading at 16x forward P ...

  • CFA Level 1 Study Guide - Derivatives - Forward Contracts on Bonds ...

    http://www.investopedia.com/exam-guide/cfa-level-1/derivatives/forward-contracts-on-bonds.asp
    ... 5.11 Spot Market Calculations; 5.12 Forward Market Calculations; 5.13 Interest
    Applications; ... 15.20 Currency Forward Contracts; 15.21 Futures vs. ...

  • Utica Shale Moves A Step Forward

    http://stocks.investopedia.com/stock-analysis/2010/Utica-Shale-Moves-A-Step-Forward-QEC-GMR-FST-RRC-TLM0303.aspx
    ... Utica Shale Moves A Step Forward. ... Natural gas sold here also sells at a
    premium price relative to other hubs in the United States. ...

  • Petrohawk Flies Into The Sunset

    http://stocks.investopedia.com/stock-analysis/2011/Petrohawk-Flies-Into-The-Sunset-BHP-HK-BHI-ROSE-EOG-RRC-BEXP0719.aspx
    ... EBITDA for Petrohawk - more or less near the "standard" forward multiple for a company
    like this (albeit a premium to the current group average in the "5s"). ...

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