The Treasurer of Company X intends borrowing fixed rate one year from now. The particular loan is

Question:

The Treasurer of Company X intends borrowing fixed rate one year from now. The particular loan is to have a one-year maturity. Unfortunately, interest rates on fixed rate loans could rise before then. The solution could be to negotiate an FRA covering the interim year. The currently quoted two-year fixed rate is 6% and the one-year rate is 7%.

What would be a fair rate of interest on the FRA?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: