Final answer:
The difference between a spot rate and a forward rate is termed the forward premium or discount.
Step-by-step explanation:
The difference between a spot rate and a forward rate is termed the forward premium or discount.
A spot rate is the current exchange rate for immediate delivery of a currency, while a forward rate is the exchange rate for a future delivery date. The forward premium or discount represents the difference between these two rates.
If the forward rate is higher than the spot rate, it is considered a forward premium, indicating that the future value of the currency is expected to be higher. On the other hand, if the forward rate is lower than the spot rate, it is a forward discount, suggesting that the future value of the currency is expected to be lower.