lphaBeta Ltd needs to borrow $10 million for a 3-month period in 3 months' time. In order to hedge the exposure to interest rates rising AlphaBeta buys a 3X6 FRA based on LIBOR with a 90/360-day count convention. All interest rates are compounded quarterly. It enters the FRA at a FRA rate of 3% per annum. AlphaBeta can borrow at LIBOR + 0.5%.

In three months' time at settlement of the FRA LIBOR is 3.6%.

1. The cash-flow on the FRA is Answernegativepositive Answerdollars. Do not include dollar sign ($) or commas in your answer. Write your answer as a whole number.
2. When Alphabeta borrows for the three month period the effective cost of borrowing is Answer% per annum. Write your answer correct to one decimal place.