A Forward Rate Agreement Contains an Agreed Interest Rate of 3.1

question 14

Multiple Choice

A Forward Rate Agreement contains an agreed interest rate of 3.1% on a 6-month loan.If settled in arrears,what amount would the borrower pay or receive on an $800,000 loan if the prevailing 6-month interest rate is 3.6%?

• A) $4,000 payment
• B) $4,000 receipt
• C) $1,729 payment
• D) $1,729 receipt

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