Derive the forward interest rate between two future dates from spot rates.
Please do not make financial decisions based on these results.
What is the Forward Rate Calculator?
Derive the forward interest rate between two future dates from spot rates. To use the Forward Rate Calculator, enter spot rate to time 1, time 1, spot rate to time 2, time 2; it returns forward rate, and shows them instantly as you type.
Where the Forward Rate Calculator fits
Derive the forward interest rate between two future dates from spot rates. The main figure it returns is the Forward rate, worked out from the values you enter.
It belongs with the other options & derivatives tools. If you are comparing options or checking a result from another angle, try the Forward Premium Calculator, Black Scholes Calculator or the Call Option Calculator.
How to use the Forward Rate Calculator
- Fill in the fields. You will need Spot rate to time 1 (%), Time 1 (years), Spot rate to time 2 (%), Time 2 (years). Use real figures from your own records where you can. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Forward rate. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Forward Rate Calculator using the default values shown in the calculator above:
Inputs
| Spot rate to time 1 (%) | 4 |
|---|---|
| Time 1 (years) | 1 |
| Spot rate to time 2 (%) | 4.6 |
| Time 2 (years) | 3 |
Results
| Forward rate | 4.9% |
|---|
With these inputs the calculator returns Forward rate: 4.9%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Spot rate to time 1 (%) from 4 to 4.8 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Forward rate | 4.9% | 4.5% | -8.2% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
What does the forward rate imply?
The rate the market expects for borrowing between two future dates.
Which option model is used?
The Black-Scholes-Merton model for European options, with an optional dividend yield. American options can be worth more.
Can I lose more than I invest?
Buying options risks only the premium, but selling uncovered options or trading futures can lose far more than the margin posted.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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