STR Investment Inc. wants to fix the borrowing rate and enters a forward rate agreement (FRA) with HO bank. The information is as below: Expires/settles in 60 days. Notional principal amount is 40million. Market rate is based on 120-day LIBOR. The forward rate is 4%. Assume the actual 120-day LIBOR 60 days from now is 3.5% a. Calculate the cash settlement payment at expiration and identify which party makes the payment. (8 marks) b. What is the type of FRA? (2 marks) STR Investment Inc. wants to fix the borrowing rate and enters a forward rate agreement (FRA) with HO bank. The information is as below: Expires/settles in 60 days. Notional principal amount is 40million. Market rate is based on 120-day LIBOR. The forward rate is 4%. Assume the actual 120-day LIBOR 60 days from now is 3.5% a. Calculate the cash settlement payment at expiration and identify which party makes the payment. (8 marks) b. What is the type of FRA? (2 marks)