If the FRA Has a ________ of 5% for Three-Month

question 8

Multiple Choice

If the FRA has a ________ of 5% for three-month LIBOR (the ________) and the notional amount is for $10 million, the buyer is agreeing to pay 5% to buy or borrow $10 million at the settlement date and the seller is agreeing to receive 5% to sell or lend $10 million at the settlement date.

• A) settlement rate; contract rate
• B) reference rate; contract rate
• C) settlement rate; reference rate
• D) contract rate; reference rate

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Definitions:

Maximum Rent

The highest price that can be charged for a property or piece of land, often regulated by law in rent-controlled areas to protect tenants from excessive rent increases.

Price Elastic

refers to the responsiveness of the quantity demanded of a good or service to a change in its price.

Per-Unit Tax

A tax imposed on a product based on the number of units purchased, not the value of the purchase.

Buyers

Individuals or entities that exchange money for goods and services.