Use our free Forward Rate Calculator to accurately determine the implied interest rate between two future dates. This essential tool helps investors and analysts forecast future interest rates from current spot rates for smarter investment planning and risk management decisions.
Formula:
The Forward Rate (F) is calculated using the following formula:
F = [((1 + S₂/100)T₂ / (1 + S₁/100)T₁))(1 / (T₂ - T₁)) - 1] * 100
Where:
- F = Forward Rate (as an annualized percentage for the period from T₁ to T₂)
- S₁ = Spot Rate for Shorter Period T₁ (annualized percentage)
- T₁ = Length of Shorter Period (in years)
- S₂ = Spot Rate for Longer Period T₂ (annualized percentage)
- T₂ = Length of Longer Period (in years)
Note: T₂ must be greater than T₁.