Assume the Following Terms for an FRA: Reference Rate Is

question 35

Multiple Choice

Assume the following terms for an FRA: Reference rate is three-month LIBOR, the contract rate is 4.5%, the notional amount is for $10 million, and the number of days to settlement is 91 days. If the settlement rate is 5.15%, what compensation or payment must make to the buyer by the seller?

• A) $16,431
• B) $16,219
• C) $16,003
• D) $15,874

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Definitions:

Cost Trends

Patterns or movements in cost over a period of time, indicating how expenses are changing and affecting profitability.

Yield Trends

Refers to the patterns or movements in the yield or return on investments, securities, or assets over a certain period.

Lean Manufacturing

A production methodology aimed at minimizing waste within manufacturing systems while simultaneously maximizing productivity.

Cross-Trained

Refers to individuals who have been trained in multiple skills or job functions, enhancing flexibility and efficiency within an organization.