bank management

1. Metro Bank enters an FRA as a buyer with the following features: - Expiration/Settles in 180 days - The notional amount is $1 million. - Specifies a forward rate of 5% - The underlying interest rate is 90 days LIBOR. a) If in 180 days (at expiration) the 90-day L.IBOR is at 6%. Compute the cash settement payment at expiration for Metro Bank. (7 marks) b) What if in 180 days (at expiration) the 90 -day L.IBOR is at 3.5% Compute the cash settlement payment at expiration for Metro Bank, (7 marks)