(Answered) What are the risks in a fra if you are the buyeranswer the

Finance

What are the risks in a FRA if you are the buyer?

Answer the following questions:

a. When will the buyer of a five year cap on three- month LIBOR with a 1 percent strike rate expect to receive cash? What is the cap premium?

b. When will the buyer of a two year floor on three- month LIBOR with a 0.25 per-cent strike rate expect to receive cash? What is the floor premium?

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Financial Management, Finance

Category:- Financial Management
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