Suppose that in order to hedge interest rate risk on your borrowing you enterinto an FRA that will guarantee a 6% effective annual interest rate for 1 year on

$550,000.00.On the date you borrow the $550,000.00, the actual interest is

5%.Determine the dollar settlement of the FRA assuming

(i)Settlement occurs on the date the loan is initiated.

(ii) Settlement occurs on the date the loan is repaid.