A $100 Notional 6×12 FRA Has the Following Features at Inception

question 26

Multiple Choice

A $100 notional 6×12 FRA has the following features at inception. The first six month period is 182 days and the second is 183 days. The locked-in rate on the FRA is 6%. After one month the 5×11 FRA is trading at a fair strike of 6.2% with 151 days in the first five month period. What is the value of the FRA to the buyer if the five-month Libor rate at this point is is 5%?

• A) (+0.0965)
• B) (?0.0965)
• C) \(+ 0.0986\)
• D)( -0.0986)

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Definitions:

Brickman's Model

A framework for understanding the roles and responsibilities in the helping process, identifying different perspectives on personal problems and their solutions.

Transdermal

A method of delivering medication directly through the skin into the bloodstream.

Cocaine

A powerful stimulant drug derived from the leaves of the coca plant, used medically as a local anesthetic and illicitly for its euphoric effects.

Hippocampus

A major component of the brain located in the temporal lobe, crucial for memory formation and spatial navigation.