Many companies prefer forward rate agreements (FRAs)to futures contracts as:
A)an FRA allows the company to close out the agreement before settlement.
B)an FRA allows flexibility to reverse the contract.
C)an FRA can be more closely tailored to the companies specific needs.
D)None of the given answers.

Question

Quizplus · Accepted Answer

FRAs can be customized to match the specific amount and time period a company needs, offering more flexibility than standardized futures contracts. This customization allows companies to more precisely manage their interest rate risk.

Many Companies Prefer Forward Rate Agreements (FRAs)to Futures Contracts As