Forward rate
Investopedia | 2014-06-04 18:24

The forward rate is the future yield on a bond. It is calculated using the yield curve. For example, the yield on a three-month Treasury bill six months from now is a forward rate.

Forward rate calculation
To extract the forward rate, one needs the zero-coupon yield curve. The general formula used to calculate the forward rate is:
Simple rate

Compound rate
 
Exponential rate
 
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