A $100,000,000 $3 \times 6$ FRA Has a Fixed Rate of 4

question 20

Multiple Choice

A $100,000,000 $3 \times 6$ FRA has a fixed rate of 4%. The first three-month period is for 91 days and the second one for 92 days. The 91-day Libor rate is 3% and the 183-day Libor rate is 3.5%. The value of this contract to the buyer of the FRA is

• A) \(- \$ 8913\)
• B) \(- \$ 4822\)
• C) \(+ \$ 3289\)
• D) \(+ \$ 5433\)

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Definitions:

Fever

An increase in body temperature above the normal range, often indicating the presence of an infection or other health condition.

Congestion

A state of being overcrowded and full to the point of causing blockage or dysfunction, often used in reference to traffic or nasal passages.

Transitional Expressions

Words or phrases used to smoothly connect ideas between sentences and paragraphs, enhancing flow.

Comparison

The act of evaluating two or more entities to identify their similarities and differences.