In a Forward Rate Agreement (FRA), Two Parties Agree Today

question 90

True/False

In a forward rate agreement (FRA), two parties agree today to a future exchange of cash flows based on two different interest rates.

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Definitions:

Capital Leases

Lease agreements that involve the lessee effectively owning the asset and accruing its benefits and drawbacks, subject to certain criteria.

Operating Lease

A contractual arrangement giving the lessee temporary use of the property, with continued ownership of the property by the lessor.

Capital Lease

A capital lease is a lease agreement that transfers substantially all the risks and benefits of ownership from the lessor to the lessee.

Bargain Purchase Option

A provision in a lease agreement that allows the lessee to purchase the leased asset at a price significantly below its fair market value.