The Advantage of Using a Forward Rate Agreement FRA Over

question 24

Multiple Choice

The advantage of using a forward rate agreement FRA over a futures contract is:

• A) FRAs are highly standardised.
• B) FRAs have only an initial margin and no ongoing maintenance margin.
• C) the terms and conditions of a FRA can be negotiated.
• D) FRAs have standardised maturities.

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Definitions:

Line Voltage

The voltage measured between any two lines in a multi-phase electrical power system, often higher than the voltage from any one line to neutral.

Phase Voltage

The voltage measured in a single phase of a multi-phase system, often in a three-phase electrical system, relative to neutral.

Alternator

A machine used to generate AC by rotating conductors through a magnetic field.

Capacitance

The ability of a system to store an electrical charge per unit voltage, represented in farads.