You Are Given the Following Data Concerning a 6×12 FRA

question 13

Multiple Choice

You are given the following data concerning a 6×12 FRA. The first six-month period is 182 days and the second is 183 days. The Libor rate for six months is 5% and for one year is 6%. The arbitrage-free price of the 6×12 FRA, assuming the Actual/360 day-count convention, is

• A) 5.50%
• B) 6.22%
• C) 6.55%
• D) 6.82%

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Definitions:

Attribution Theory

A theory focused on how people interpret and understand their experiences by ascribing causes to behaviors and events.

Stereotype Threat

The risk of confirming negative stereotypes about an individual’s racial, ethnic, gender, or cultural group, which can hinder performance in various domains.

Jigsaw Classroom

An educational approach designed to minimize competition and maximize collaboration among students by giving each member of a group a piece of the overall puzzle to contribute.

Stereotype Threat

A psychological phenomenon where individuals fear they will be judged or treated based on negative stereotypes about their group, which can hinder their performance.