The difference between forward exchange rate and spot exchange rate is expressed by premium, discount and average price. Premium means that the forward exchange rate is higher than the spot exchange rate, while the discount is the opposite. In general, the currency forward exchange rate with higher interest rate is mostly discount, and the currency forward exchange rate with lower interest rate is mostly premium. ?
The conversion price is related to the face value of convertible bonds, and the conversion parity is related to the market price of convertible bonds (conversion parity = market price of convertible bonds/conversion ratio). When the stock price in the market is equal to the conversion parity, investors are in breakeven, and when the stock market price is lower than the conversion parity, they are at a premium; On the contrary, it is in a discounted state, and there is an arbitrage opportunity at this time. The calculation of premium and discount can be directly compared with the stock market price and conversion parity.
Futures discount and futures premium
In the futures market, if the spot price is lower than the futures price, the basis is negative, and the forward futures price is higher than the recent futures price. This situation is called "futures premium", and the part where the forward futures price exceeds the recent futures price is called "futures premium rate"; If the forward futures price is lower than the recent futures price and the spot price is higher than the futures price, the basis is positive, which is called "futures discount", and the part of the forward futures price lower than the recent futures price is called "futures discount rate".
Basis consists of two components, namely "time" and "space" between spot and futures markets. The former reflects the time factor between the two markets, that is, the holding cost in two different delivery months, and it also includes storage fee, interest, insurance premium and loss fee, among which the change of interest rate has a great influence on the holding cost. The latter reflects the spatial factors between the spot market and the futures market, and the basis includes the transportation cost and holding cost between the two markets.