You Entered in to a 3*6 Forward Rate Agreement That

question 101

Multiple Choice

You entered in to a 3*6 forward rate agreement that obliged you to borrow $10,000,000 at 3%.Suppose at the maturity of the FRA,the correct interest rate is 3½%.Clearly you are better off since you have the ability to borrow $10,000,000 for 3 months at 3% instead of 3½%.What is the payoff at the maturity of the FRA?

• A)Net payment of $12,391.57 to you
• B)Net payment of $12,500 to you
• C)Net payment of $50,000 to you
• D)Net payment of $48,309.18 to you

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Definitions:

Hindbrain

The posterior part of the brain that includes the cerebellum, pons, and medulla oblongata, responsible for regulating basic life functions like breathing and heart rate.

Thalamus

A brain structure acting as a relay station for sensory and motor signals to the cerebral cortex, excluding the sense of smell.

Relay Information

The process of transmitting information or messages from one person, device, or group to another.

Coordinate Muscle

The process of different muscles working together to perform movements smoothly and accurately.