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:

Sensory Information

Data obtained from the environment through the senses - sight, hearing, touch, taste, and smell - which is then processed by the brain to form perceptions.

Bridge

A structure built to span physical obstacles without blocking the way underneath it, typically designed for road, railway, or pedestrian use.

Brainstem

The lower extension of the brain where it connects to the spinal cord, managing vital functions such as breathing, heart rate, and blood pressure.

Cerebellum

A part of the brain located at the back of the skull, crucial for motor control, balance, and coordination.