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

Question

Quizplus · Accepted Answer

In foreign exchange markets, if the forward rate of a currency (e.g., euros) is lower than its spot rate against another currency (e.g., dollars), it means you get more of that currency for a dollar in the forward market than in the spot market. This situation is described as the currency (euro in this case) selling at a discount to its spot rate.

If an Investor Can Obtain More Euros for a Dollar