An FRA Is Most Like Which of the Following Transactions

question 60

Multiple Choice

An FRA is most like which of the following transactions

• A)an interest rate cap
• B)an interest rate floor
• C)an interest rate collar
• D)a forward contract
• E)none of the above

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Definitions:

Strategic Situations

Scenarios in which individuals or organizations must make decisions that consider the actions and reactions of other participants.

Price-Fixing

An illegal agreement among competitors to set prices at a certain level, rather than allowing them to be determined naturally by market forces.

Cartels

An agreement among competing firms to control prices or exclude entry of a new competitor in the market, often illegal and against free market principles.

Antitrust Laws

Legislation enacted to prevent monopolies and encourage competition in the market, ensuring fair practices and protecting consumers.