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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