A "Three Against Nine" Forward Rate Agreement

question 54

Multiple Choice

A "three against nine" forward rate agreement

• A)could call for a buyer to sell a six-month Eurobond in three months at prices agreed upon today.
• B)could call for a buyer to pay the seller the increased interest cost on a notational amount if six-month interest rates fall below an agreed rate beginning three months from now and ending nine months from now.
• C)is a forward contract on a three-month Eurobond with a nine-month maturity.
• D)is a forward contract on a nine-month Eurobond with a three-month maturity.

---

Definitions:

Finite Population Correction

An adjustment made to statistical calculations like the standard error when sampling from a finite population, to account for the decreased variability expected in such samples.

Population Size

The total number of individuals or units in the group or set being studied.

Sample Size

This term refers to the number of observations or replicates used in a statistical analysis.

Central Limit Theorem

A statistical theory stating that the distribution of sample means approximates a normal distribution as the sample size becomes large, regardless of the population's distribution.