Description
Calculate forward discount and growth ratios from two supplied discount factors.
Financial market terms depend on quote conventions, contract multipliers, rate units, horizons and signed positions. A price gap, intrinsic value or linear sensitivity is a limited scenario term rather than an executable price or complete valuation. Variance, volatility, fractional rates and basis points are different quantities.
Calculate forward discount and growth ratios from two supplied discount factors.
When to use this tool
Use Forward Period Discount Ratio when checking the stated supplied market, valuation or exposure convention.
How to use the tool and how it works
- Enter earlierDiscountFactor, laterDiscountFactor. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read forwardDiscountFactor, forwardGrowthFactor. Use the output convention below.
Require positive earlier/later discount factors. Return later/earlier as forward discount and earlier/later as forward growth.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| earlierDiscountFactor | Earlier Discount Factor | Required. Finite number; strictly above 0. |
| laterDiscountFactor | Later Discount Factor | Required. Finite number; strictly above 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| forwardDiscountFactor | Later discount factor/earlier factor; forwardGrowthFactor is its reciprocal. | Required. Finite number. |
| forwardGrowthFactor | Forward Growth Factor | Required. Finite number. |
{
"input": {
"earlierDiscountFactor": 0.96,
"laterDiscountFactor": 0.9
},
"output": {
"forwardDiscountFactor": 0.9375000000000001,
"forwardGrowthFactor": 1.0666666666666667
}
}Limitations and assumptions
- Factors need the same numeraire, origin and consistent dates; chronology, curve validity and arbitrage conditions are not checked.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use verified contract/market data and a complete suitable valuation and risk model with qualified financial advice for actual investment or trading decisions.
References
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