Selling a FRA has the same interest rate exposure as:
A) Opening a positive gap
B) Going over-borrowed
C) Making a forward-forward loan
D) Taking a forward-forward deposit

Question

Quizplus · Accepted Answer

Selling a FRA involves entering into a forward contract to deliver a fixed interest rate. Making a forward-forward loan also involves entering into a forward contract to receive a fixed interest rate in the future, making it the most similar in terms of interest rate exposure. Choices A and B refer to balance sheet management strategies, while choice D involves taking a fixed interest rate deposit in the future, rather than delivering one.

Selling a FRA Has the Same Interest Rate Exposure As