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A matched FRA book can be used to help banks generate additional income, as reflected in the following diagram. X% Y% Buyer Derby Bank Seller
A matched FRA book can be used to help banks generate additional income, as reflected in the following diagram. X% Y% Buyer Derby Bank Seller Market rate Market rate 1) Give specific numerical examples of X and Y to illustrate the profit of running a matched FRA book for Derby Bank (11) Explain how this profit will be affected if market interest rates increase
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