Forward Price

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Related to Forward exchange rates: Forward premium

Forward Price

The agreed upon price of the underlying asset in a forward contract. When a forward contract is made, the parties agree to buy/sell the underlying at a certain point in the future at a certain price. The price is negotiated directly between the parties, unlike a futures contract, which trades on an exchange. Partly because there is little secondary market for forward contracts, determining the forward price is a zero-sum game: one party will gain on the contract and one will lose.
References in periodicals archive ?
9) We further empirically examine the informational content of forward exchange rates and discuss the role of liquidity in the predictive power of the forward exchange rates.
IRP, coupled with PPP and the expectations theory of forward exchange rates, implies the international Fisher effect (Emery & Finnerty, 2007).
Spot and one year forward exchange rates for the euro ([euro]) and the British pound ([pounds sterling]) are collected for 197 weeks during which the euro zone debt crisis occurred.
Forward Exchange Rates as Optimal Predictors of Future Spot Rates: An Econometric Analysis.
Given that both the spot and forward exchange rates are non-stationary variables, a randomly chosen linear combination of these variables, e.
In more efficient markets, such as the Eurocurrency markets, forward exchange rates are based on both current and future expectations of the interest rate differential.
p]-statistics indicated that both logs of the spot and forward exchange rates were unstable but that the expected rate of appreciation and the risk premium were stable series with an AR(1) process for all countries.
The modern approach to forward exchange rate determination suggests that the equilibrium forward exchange rate is determined by the actions of two groups, arbitrageurs and speculators.
In the presence of microstructure frictions, spot and forward exchange rates move against traders as they increase their positions.
Forward exchange rates often reveal the market's best guess about a currency's future path, but no forward renminbi market exists because China restricts such trading.
First, we consider an alternative method of calculating the currency risk premium using forward exchange rates.
With the market approach, you let forward exchange rates and your observations on currency volatility guide your choices.

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