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 the forward rate is higher than the spot rate, it indicates that the foreign currency is expected to depreciate against the dollar, hence it is selling at a discount.

If an Investor Can Obtain More of a Foreign Currency