You entered into a long 3 × 6 forward rate agreement on a notional amount of $10,000,000 at an agreement rate of 3 percent. Suppose at the settlement date of the FRA, the settlement rate is 3.5 percent. What is the cash settlement of the FRA? Net payment of $12,391.57 to you Net payment of $12,500 to you Net payment of $50,000 to you Net payment of $48,309.18 to you
You entered into a long 3 × 6 forward rate agreement on a notional amount of $10,000,000 at an agreement rate of 3 percent. Suppose at the settlement date of the FRA, the settlement rate is 3.5 percent. What is the cash settlement of the FRA? Net payment of $12,391.57 to you Net payment of $12,500 to you Net payment of $50,000 to you Net payment of $48,309.18 to you
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You entered into a long 3 × 6 forward rate agreement on a notional amount of $10,000,000 at an agreement rate of 3 percent. Suppose at the settlement date of the FRA, the settlement rate is 3.5 percent. What is the cash settlement of the FRA?
Net payment of $12,391.57 to you
Net payment of $12,500 to you
Net payment of $50,000 to you
Net payment of $48,309.18 to you
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