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Question: Assume a FRA(Forward rate agreement) exists in which Trader A has agree to receive 30% (per annum based on semi-annually compounding) for a 6-month period starting 3 months from now on a principal of $1,000,000. Current zero rates are provided in the table below

Given the above information please answer the following two questions.

1. What is the value of the FRA to the person receiving funds?

2. What is the value of the FRA when it is initially entered into and what specifically causes the value of the FRA to change?

Term 3 month 6 months 9 months Zero rate per annum based on continuous compounding 10% 15% 20%

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Category:- Basic Finance
Reference No.:- M92775499

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