2. A bank sells a "hiree against six" $3,000,000FRA for a ttree-month period beginning three months from today and ending six months from today. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a three-month Eurodollar loan and having accepted a six-hooth Eurodollar deposit. The agreement rate with the buyer is 5.5 percent. There are actually 92 ) days in the tiree-month FRA period. Assume that three months from today the settement rate is 4.7/8 percent. Deternine how much the FRA is worth and who pays who-the buyer pays the seller or the seller pays the buyer. 4. A "three-against-nine" FRA has an agreement rate of 4.75 percent. You believe six-month LIBOR in three months will be 5.125 percent. You decide to take a speculative position is a FRA with a 51.000,000 notional salae. There are 183 days in the FRA period. Determine whether you should buy or sell the FRA and what your expected profit will be if your forecast is correct about the six-month LIBOR rate. Solution: Since the agreement rate is less than your forecast, you should buy o FRA. If your forecast is conect your expected profit will be