Chemical ionization: Difference between revisions

From formulasearchengine
Jump to navigation Jump to search
en>BattyBot
Line 1: Line 1:
{{distinguish|forward price|forward exchange rate}}
I'm Myles (27) from Oxnard, United States. <br>I'm learning Turkish literature at a local high school and I'm just about to graduate.<br>I have a part time job in a university.<br><br>my webpage ... [http://www.ultimatefunthemes.com/2013/03/06/sneakpeek/ Fifa coin Generator]
The '''forward rate''' is the future yield on a [[bond (finance)|bond]]. It is calculated using the [[yield curve]]. For example, the yield on a three-month [[Treasury bill]] six months from now is a ''forward rate''.<ref>{{Citation |last=Fabozzi |first=Vamsi.K|title=The Handbook of Fixed Income Securities |edition=Seventh |location=New York |publisher=kvrv |year=2012 |isbn=0-07-144099-2 |page=148 }}.</ref>
 
==Forward rate calculation==
 
To extract the forward rate, one needs the [[Zero-coupon bond|zero-coupon]] [[yield curve]]. The general formula used to calculate the forward rate is:
 
:<math>r_{t_1,t_2} = \left(\frac{(1+r_2)^{d_2}}{(1+r_1)^{d_1}}\right)^{\frac{1}{d_2-d_1}} - 1 </math>
 
<math>r_{t_1,t_2} </math>  is the forward rate between term <math> t_1 </math> and term <math> t_2 </math>,
 
<math> d_1 </math> is the time length between time 0 and term <math> t_1 </math> (in years),
 
<math> d_2 </math> is the time length between time 0 and term <math> t_2 </math> (in years),
 
<math> r_1 </math> is the zero-coupon yield for the time period <math> (0, t_1) </math>,
 
<math> r_2 </math> is the zero-coupon yield for the time period <math> (0, t_2) </math>,
 
=== Derivation ===
 
We are trying to find the future interest rate for time period <math>(t_1, t_2)</math>, given the rate <math>r_1</math> for time period <math>(0, t_1)</math> and rate <math>r_2</math> for time period <math>(0, t_2)</math>. To do this, we solve for the interest rate <math>r_{t_1,t_2}</math> for time period <math>(t_1, t_2)</math> for which the proceeds from investing at rate <math>r_1</math> for time period <math>(0, t_1)</math> and then [[reinvestment|reinvesting]] those proceeds at rate <math>r_{t_1,t_2}</math> for time period <math>(t_1, t_2)</math> is equal to the proceeds from investing at rate <math>r_2</math> for time period <math>(0, t_2)</math>. Or, mathematically:
 
:<math>(1+r_1)^{d_1}(1+r_{t_1,t_2})^{d_2-d_1} = (1+r_2)^{d_2}</math>
 
Solving for <math>r_{t_1,t_2}</math> yields the above formula.
 
== Related instruments ==
* [[Forward rate agreement]]
* [[Floating rate note]]
 
A forward discount is when the forward rate of one currency relative to another currency is higher than the spot rate.
 
A forward premium is when the forward rate of one currency relative to another currency is lower than the spot rate.
 
== See also ==
*[[Forward price]]
 
== References ==
{{Reflist}}
{{Portfilo market}}
 
[[Category:Financial economics]]

Revision as of 23:06, 5 February 2014

I'm Myles (27) from Oxnard, United States.
I'm learning Turkish literature at a local high school and I'm just about to graduate.
I have a part time job in a university.

my webpage ... Fifa coin Generator