Forward Prices, Spot Rates & Forward Rates, Yield-to-Maturity, Forward Rate Agreements (FRA), Forward Contracts and Forward Exchange Rates
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Forward Prices, Spot Rates & Forward Rates, Yield-to-Maturity, Forward Rate Agreements (FRA), Forward Contracts and Forward Exchange Rates

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Product Details
Course Type: PDF download
Files Included: 1 PDF
No. of pages: 24

About the Course

This course is a calculation reference for Forward Prices, Spot Rates & Forward Rates, Yield-to-Maturity, Forward Rate Agreements (FRA), Forward Contracts and Forward Exchange Rates. It also provides a detailed walkthrough (with examples) of how these values may be determined in EXCEL.

Detailed methodologies are given for the following:

1. Forward Prices

  • Forward price of a security with no income
  • Forward price of a security with known cash income
  • Forward price of a security with known dividend yield

2. Relationship between spot rates and forward rates

  • How to determine forward rates from spot rates
  • How to determine spot rates from forward rates

3. Yield to Maturity (YTM)

  • Trial and error method
  • Using Goal Seek functionality

4. Forward Rate Agreements (FRAs)

  • Value of an FRA (zero coupon rate calculated on a discrete basis)
  • Value of an FRA (zero coupon rate calculated on continuously compounded basis)

5. Forward Exchange Rates

  • FX Rates (Interest Rates compounded on a discrete basis)
  • FX Rates (Interest Rates compounded on a continuous basis)

6. Value of a Forward Contract

  • Value of a long forward (continuous)
  • Value of a long forward (discrete)
  • Value of a long forward contract (continuous) which provides a known income
  • Value of a long forward contract (continuous) which provides a known yield
  • Value of a forward foreign currency contract

Learning Objectives

After taking this course you will be able to:

  • Calculate forward prices
  • Understand the relationship between spot and forward rates
  • Determine forward rates from spot rates and vice versa
  • Calculate YTM using the trial and error method
  • Calculate YTM using EXCEL’s Goal Seek functionality
  • Calculate the values of forward rate agreements
  • Calculate the values of forward contracts

Prerequisites

The candidate should be comfortable with basic mathematics, statistics, probability and EXCEL.

Target Audience

This course is for beginners in the finance field and is also aimed at banking, corporate, treasury and sales teams.

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