Forward Rate Calculator
Forward Rate Calculator
Component | Description |
---|---|
Spot Rate | The current interest rate for a specific term. |
Future Spot Rate | The expected interest rate for a specific term in the future. |
Forward Rate | The interest rate agreed upon today for a loan or investment that will occur in the future. |
Formula | Forward Rate = ((1 + Future Spot Rate)^n / (1 + Spot Rate)^m)^(1/(n-m)) – 1 |
Purpose | Used to determine the interest rate for financial transactions that will occur in the future. |