F
   
   Forward Premium
   















 

F

Forward Premium

A price relationship in which a forward price, often a currency exchange rate, is at a premium to the spot price. This relationship, common in financial markets, often reflects the possible carrying cost of the underlying instrument. In exchange rate markets, it reflects the relative level of interest rates in the two countries whose currencies are involved, and indicates that interest rates are lower in the base currency country.

Glossary * F