Schweser Exam 2 Afternoon - 18.4 - FRA period, payment, received, discounted

cfalevel2011

Is the payment from an FRA received at the end of the loan period? Why?. I did 7,500 discounted 3 months at the rft, but evidently 7,500 is received at the end of the loan. Why?

Windjam

In FRA, rate is determined at the agreed upon date, but payment is received at maturity. if you want to receive the payment now, discount it by prevailing rate (for exam, payment is schdl to be recvd 3 month from now, discount it by current 3MLIBOR) for the correspondent period, but not by RFR. L1 materials.