QUESTION $2$

Suppose that a party wanted to enter into an FRA that expires in $42$ days and is based on $137-$day LIBOR. The dealer quotes a rate of $4\mathrm{.}75\%$ on this FRA.

Assume that at expiration, the $137-$day LIBOR is $4\%$ and the notional principal is $$40,000,000.$

Calculate the FRA payoff on a short position $.$