|
LOS f: Describe the characteristics of forward rate agreements (FRAs).
Q1. The short in a forward rate agreement:
A) profits if LIBOR decreases.
B) faces default risk.
C) profits if London Interbank Offered Rate (LIBOR) increases.
Q2. A forward rate agreement (FRA):
A) can be used to hedge the interest rate exposure of a floating-rate loan.
B) is settled by making a loan at the contract rate.
C) is risk-free when based on the Treasury bill rate.
Q3. An FRA is:
A) the Futures Regulatory Administration.
B) a Forward Riskfree Asset.
C) a Forward Rate Agreement.
Q4. A forward rate agreement (FRA):
A) can sometimes be viewed as the right to borrow money at below-market rates.
B) requires the long to pay cash to the short if the rate specified in the contract at expiration is below the current floating rate.
C) generally uses a fixed reference interest rate.
| 
发表于 2009-3-2 09:55
| 
