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A company buys a 5 × 11 (begins after five months, ends after eleven months), 100-million-Eurodollar forward rate agreement (FRA) that has an FRA rate of 4 percent per year.

If the 6-month bbalibor [or ICE LIBOR] rate announced after five months is 5.5 percent per year, then (assuming 182 days in the six-month period and 360 days in the year), the buyer will receive on the settlement date (after five months).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93053721

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