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Annualised Forward Premium Formula

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Annualised Forward Premium is the difference between the forward exchange rate and the spot exchange rate, expressed as an annualised percentage. Check FAQs

p = ((\frac{F R - S}{S}) \cdot (\frac{360}{n})) \cdot 100

p - Annualised Forward Premium?F_R - Forward Rate?S - Spot Rate?n - No. of Days?

Annualised Forward Premium Example

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With units

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Here is how the Annualised Forward Premium equation looks like with Values.

Here is how the Annualised Forward Premium equation looks like with Units.

Here is how the Annualised Forward Premium equation looks like.

12.1212 = ((\frac{102 - 99}{99}) \cdot (\frac{360}{90})) \cdot 100

12.1212 = ((\frac{102 - 99}{99}) \cdot (\frac{360}{90})) \cdot 100

12.1212 = ((\frac{102 - 99}{99}) \cdot (\frac{360}{90})) \cdot 100

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Annualised Forward Premium Solution

Follow our step by step solution on how to calculate Annualised Forward Premium?

FIRST Step Consider the formula

p = ((\frac{F R - S}{S}) \cdot (\frac{360}{n})) \cdot 100

Next Step Substitute values of Variables

∴

p = ((\frac{102 - 99}{99}) \cdot (\frac{360}{90})) \cdot 100

Next Step Prepare to Evaluate

∴

p = ((\frac{102 - 99}{99}) \cdot (\frac{360}{90})) \cdot 100

Next Step Evaluate

∴

p = 12.1212121212121

LAST Step Rounding Answer

∴

p = 12.1212

Annualised Forward Premium Formula Elements

Variables

Annualised Forward Premium

Annualised Forward Premium is the difference between the forward exchange rate and the spot exchange rate, expressed as an annualised percentage.

Symbol: p

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Annualised Forward Premium

Forward Rate

Forward Rate is the agreed-upon exchange rate for a future currency transaction, set today.

Symbol: F_R

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Forward Rate

Spot Rate

Spot Rate is the current exchange rate for immediate currency exchange.

Symbol: S

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Spot Rate

No. of Days

No. of Days is the number of days over which the forward premium is annualized, typically 360 or 365 days.

Symbol: n

Measurement: NAUnit: Unitless

Note: Value should be between 0 to 360.

Formulas to find No. of Days

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F = (e o) \cdot (\frac{1 + r f}{1 + r d})

How to Evaluate Annualised Forward Premium?

Annualised Forward Premium evaluator uses Annualised Forward Premium = (((Forward Rate-Spot Rate)/Spot Rate)*(360/No. of Days))*100 to evaluate the Annualised Forward Premium, The Annualised Forward Premium formula is difference between forward exchange rate and the spot exchange rate, adjusted to an annual basis. Annualised Forward Premium is denoted by p symbol.

How to evaluate Annualised Forward Premium using this online evaluator? To use this online evaluator for Annualised Forward Premium, enter Forward Rate (F_R), Spot Rate (S) & No. of Days (n) and hit the calculate button.

FAQs on Annualised Forward Premium

What is the formula to find Annualised Forward Premium?

The formula of Annualised Forward Premium is expressed as Annualised Forward Premium = (((Forward Rate-Spot Rate)/Spot Rate)*(360/No. of Days))*100. Here is an example- 12.12121 = (((102-99)/99)*(360/90))*100.

How to calculate Annualised Forward Premium?

With Forward Rate (F_R), Spot Rate (S) & No. of Days (n) we can find Annualised Forward Premium using the formula - Annualised Forward Premium = (((Forward Rate-Spot Rate)/Spot Rate)*(360/No. of Days))*100.

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Annualised Forward Premium Formula

Annualised Forward Premium Example

Annualised Forward Premium Solution

Annualised Forward Premium Formula Elements

Other formulas in International Finance category

How to Evaluate Annualised Forward Premium?

FAQs on Annualised Forward Premium

Variable Name