Yuval Bar-Or, Finance Professor; Financial Literacy Expert
@PillarsOWealth
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A spot rate is the price or rate that applies for settling a transaction NOW. For example, if you borrow money now to be repaid in a year, the one-year spot rate would apply.
A forward rate is the price or rate that applies to a transaction that will take place in the FUTURE. For example, the interest rate you'd have to pay if you borrowed a year from now and paid off the loan one year after that (i.e., two years from now).
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