Forward ratio
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A forward ratio allows you to secure a better protection rate than the benchmark forward rate. However, you may be obligated to buy an amount higher than the notional amount (at protection rate and within the limit of the defined ratio) if the spot rate at expiry is above the protection rate.
Complexity level :
Catégorie : 3 *
Guarenteed protection rate :
Protection rate level against benchmark forward rate :
Better
Amount dealt at expiry :
Potentially higher than the notional amount
In what market to use it ?
Participation in a favorable move in spot : No