ABC Bank (seller) has make a "three against six" forward rate agreement (FRA) with XYZ Bank (buyer).The notional principal is $1 million.The settlement rate is 7%.The agreement rate is 6%.Use a 30-day month and a 360-day year for the calculation.

Which of the following is true?

_____

A)ABC Bank will pay XYZ Bank a cash settlement at the beginning of the 90-day FRA period

B)XYZ Bank will pay ABC Bank a cash settlement at the beginning of the 90-day FRA period

C)ABC Bank will pay XYZ Bank a cash settlement at the end of the 90-day FRA period

D)XYZ Bank will pay XYZ Bank a cash settlement at the beginning of the 90-day FRA period

The payment amount under this FRA is

_____

A)$100,000

B)$25,438

C)$2,500

D)$2,457