Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. which of the following is not true about a forward

Which of the following is NOT true about a forward rate agreement (FRA)? Group of...

80.2K

Verified Solution

Question

Accounting

Which of the following is NOT true about a forward rate agreement (FRA)?

Group of answer choices

By choosing the LIBOR zero rate as the specified interest rate, the contracting parties of an FRA ensure that no money initially changes hands.

As time passes, the value of an FRA can become positive or negative depending on the zero rates at the time.

An FRA is an over-the-counter contract designed to fix the interest rate that will apply to a certain principal amount during a specified future time period.

When an FRA is first negotiated, the specified interest rate usually equals the forward rate, so that the contract has zero value.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

What training and support you would provide to a new line manager responsible for recruiting, selecting...

Operations Management
Q

a) What is your opinion about 401(K) and IRA? b) How taxes can impact your retirement...

Finance
Q

1 The circumference of circle E is 107 and the center is 3 4 a...

Geometry
Q

iven the three statements below identify which represent exponential equations 1 The cost of living...

Geometry
Q

Josh buys an $8000 10-year bond that has a coupon rate of 4.5 %. If...

Basic Math
Q

At Gillway Community College, 43 out of 381 students earned honors. At Montessa Valley Community...

Basic Math
Q

Suppose your city has a large hospital and a small hospital each performing major and...

Statistics
Q

Stinehelfer Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs...

Accounting
Q

Lightfoot Inc., a software development firm, has stock outstanding as follows: 30,000 shares of cumulative...

Accounting
Q

Campbell Candy Corporation desires a 14% return on investment (ROI) on all operations. The following...

Accounting
Q

Bay Graphics pays its employees each Friday for a five-day total workweek. The payroll is...

Accounting
Q

Fessenden Corporation has accumulated a significant amount of debt as a result of debt-financed acquisitions...

Accounting