The Law Dictionary

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FORWARD PRICE Definition & Legal Meaning

Definition & Citations:

The price quoted for future delivery of an ASSET under a FORWARD or FUTURE, comprised of the SPOT PRICE and a positive or negative COST OF CARRY; a quoted price may reflect a FORWARD PREMIUM or FORWARD DISCOUNT. The equilibrium, noARBITRAGE forward prices for various assets are given as follows: where S is the stock price, e is the exponential constant, r is a prevailing DISCOUNT RATE, and t is the time to maturity where Sp is the spot price, r1 is the discount rate for currency 1, r2 is the discount rate for currency 2, and all other terms are as defined above. See also FORWARD RATE.


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