Question
A forward rate agreement (FRA) that expires in 180 days and is based on 90-day LIBOR is quoted at 2.0%. At expiration of the FRA,
A forward rate agreement (FRA) that expires in 180 days and is based on 90-day LIBOR is quoted at 2.0%. At expiration of the FRA, 90-day LIBOR is 2.5%. For a notional principal of $100 million the payoff of this FRA is closest to:
a.
$165,500
b.
$150,000
c.
$125,000
d.
$124,224
Please write explanation
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Analysis for Financial Management
Authors: Robert C. Higgins
12th edition
1259918963, 9781260140729 , 978-1259918964
