It Is Important to Note the Difference of Who Benefits

question 16

True/False

It is important to note the difference of who benefits when interest rates move in an FRA and an interest rate futures contract. The buyer of an FRA benefits if the reference rate increases and the seller benefits if the reference rate decreases. In a futures contract, the buyer benefits from a falling rate while the seller benefits from a rising rate.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and practices used in the United States to ensure financial statements are consistent and transparent.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that serve as a global framework for financial reporting.

Earnings Per Share

A financial metric indicating the portion of a company's profit allocated to each outstanding share of common stock, measuring its profitability on a per-share basis.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines for preparing financial statements.