ex) chegg FUTURE RATE AGREEMENTS: FRA Money market Instruments Practice Case: Today 3m Libor quoted at 2,55-2,60%. Company pays a Floating rate (Libor +0,3% ) on a 25 min bank loan Company Expects in 3 months from now an increase in Libor rate 3x6 FRA quoted by AB-bank at 2,62-2,66% Questions? in three months from now 1) If 3m-Libor is 5%, what would be the settlement amount, the effective payment and rate on the 25 min loan? 2) If 3m-Libor is 2.5%, what would be the settlement amount, the effective payment and rate on the 25 min loan? X 7. FRA - /om $ X (5/- 3.66 ) X SA Year