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Suppose that in order tonhedge interest rate risk on your lending, you enter into an FRA that will guarantee a 4.3% effective annual interest rate
Suppose that in order tonhedge interest rate risk on your lending, you enter into an FRA that will guarantee a 4.3% effective annual interest rate for 1 year on $2,000,000. On the date you lend the $2,000,000, the actuall interest rate is 4.8%. To settle the FRA on the date the loan is initiated, you would? Answer pay $9542
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