1. Consider an FRA contract whose terms are as follows: . principal amount: L, loan period: between year T, and year T2, continuously compounded FRA rate: rf. TT. Let Im = r denote the continuously compounded spot interest rate observed at T for a loan Ti between Ti and T2. (1.1) Suppose that Bryan borrows L dollars from Sally at the spot rate I'm at time T, and repays at time T2. What is the interest he pays to Sally at time T2? (1.2) Suppose that Baron borrows L dollars from Sally at the FRA rate rf at time T and repays at time T2. What is the interest he pays to Sally at time T2? (1.3) Suppose that Ben buys the FRA contract from Sammy at time 0. Find the payoff to Sammy of this FRA contract at time Tj. (1.4) Suppose that Bob buys the FRA contract from Sammy at time 0 and borrows L dollars from Sally at the spot rate rm. What is the effective total simple interest rate Bob pays considering his payments to both Sally and Sammy? (1.5) Find the value to Bob this FRA contract at time t