1. In an FRA, the buyer agrees to pay the seller

A) the increased interest cost if interest rates increase above the agreement rate.

B) the increased interest cost on a notional amount if interest rates fall below an agreement rate.

C) the increased interest cost on a notional amount if interest rates rise above an agreement rate.

D) none of the options

2. Forward rate agreements can be used for speculative purposes. If one believes rates will be less than the agreement rate,

A) take a long position in the spot market.

B) the purchase of a FRA is the suitable position.

C) take a short position in a forward rate agreement.

D) the sale of a FRA is the suitable position.