Problem $11\mathrm{.}4$

Required:

A "three$-$against$-$nine" FRA has an agreement rate of $4\mathrm{.}88$ percent. You believe six$-$month CME Term SOFR in three months

will be $5\mathrm{.}190$ percent. You decide to take a speculative position in an FRA with a $$1,000,000$ notional value. There are $183$

days in the FRA period. Determine whether you should buy or sell the FRA and what your expected profit will be if your

forecast is correct about the six$-$month CME Term SOFR rate.

Note: Round your intermediate calculations to $6$ decimal places. Round your answer to $2$ decimal places. Assume $360$

days in a year.