If an investor can obtain more of a foreign currency for a dollar in the forward market than in the spot market, then the forward currency is said to be selling at a discount to the spot rate.

Question

Quizplus · Accepted Answer

When a forward currency is cheaper (in terms of domestic currency) than the spot rate, it is said to be selling at a discount. This means that an investor can buy more of the foreign currency in the forward market for a dollar than in the spot market.

If an Investor Can Obtain More of a Foreign Currency