You are short an $3 \times 6$ FRA and short a eurodollar futures contract expiring in 3 months.Assume the fixed rate in the FRA is the same as the rate locked in via the eurodollar futures contract.If interest rates jump up by 100 basis points,

Question

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When interest rates increase, the value of a forward rate agreement (FRA) to the party short the FRA increases because they have locked in borrowing at a lower rate than the current market rate. Conversely, the value of a short position in a Eurodollar futures contract decreases because the futures price falls with rising interest rates, leading to a loss for the party short the futures.

You Are Short An 3×63 \times 63×6 FRA and Short a Eurodollar Futures Contract Expiring in 3

You Are Short An $3 \times 6$ FRA and Short a Eurodollar Futures Contract Expiring in 3