Deriscope ## The Excel Derivatives Periscope

##### Products

forward_discount_factor

The *forward discount factor* is a number *D* - generally between *0* and *1* - that equals the cash amount one would agree today to pay at some fixed future time *T** in exchange for one currency unit received at some even later time *T*.

For demonstration let's assume the currency is USD.

Then one would agree today to pay *D* at the future time *T** for the *promise* to receive *1* US Dollar at *T*.

To the extent that this promise is deemed to be 100% reliable, the *forward discount factor* is also termed as *riskless* *forward discount factor*.

In the special case when *T** equals today's date, the *forward discount factor* becomes identical with a discount factor maturing at time *T*.