A trader enters into a FRA to receive at the rate 4% on the principal of $1,000,000 over the period 60 to 90 days. If, after 30 days, the 30-to-60 day FRA rate is 5% and the quoted yield on a 30 day bill is 4%, then what is the value of the FRA? O 819.22 O-815.87 O 815.87 O-819.22

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
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A trader enters into a FRA to receive at the rate 4% on the principal of $1,000,000 over the period 60 to 90 days.
If, after 30 days, the 30-to-60 day FRA rate is 5% and the quoted yield on a 30 day bill is 4%, then what is the
value of the FRA?
O 819.22
O 815.87
O 815.87
O 819.22
Transcribed Image Text:A trader enters into a FRA to receive at the rate 4% on the principal of $1,000,000 over the period 60 to 90 days. If, after 30 days, the 30-to-60 day FRA rate is 5% and the quoted yield on a 30 day bill is 4%, then what is the value of the FRA? O 819.22 O 815.87 O 815.87 O 819.22
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