Which of the Following Is Not True of Forward Rate

question 46

Multiple Choice

Which of the following is not true of forward rate agreements (FRA) ?

• A) The two counterparties to an FRA agree to a notional principal.
• B) FRAs are traded on an organized exchange.
• C) The buyer of a FRA agrees to pay a fixed-rate coupon payment.
• D) FRAs are not as liquid as most futures contracts.
• E) FRAs can be used to manage interest rate risk.

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Definitions:

Predators

Organisms that hunt, kill, and consume other organisms (prey) for nutrients and energy.

Ecological Community

A group of interacting species living in a common location, influencing each other's distribution, abundance, and evolutionary adaptation.

Nitrogen Fixing Bacteria

Microorganisms capable of converting atmospheric nitrogen into forms usable by plants.

Rhizobium

A genus of bacteria that forms symbiotic relationships with legumes, fixing nitrogen from the air into a form the plant can absorb and use.