Use the risk-free rates in Problem 4.6 to value an FRA where you will pay 5% for the third year and receive LIBOR on $1 million. The forward LIBOR rate (annually compounded) for the third year is 5.5%. 4-8. Use the risk-free rates in Problem 4.6 to value an FRA where you will pay 5% for the third year and receive LIBOR on $1 million. The forward LIBOR rate (annually compounded) for the third year is 5.5%. 4-8