Foreign Exchange Markets
Forward Premiums and Forward Discounts
Example - The yen spot price is 112.645 yen per dollar and the
6 month forward rate is 111.300 yen per dollar, what is the
premium and discount relationship?
4 112.645111.300-111.300x 100 = 4.8%ForwardSpot Price Price-Spot Price = Premium or (-Discount)×