The forward rate agreement is the most complicated of the OTC interest rate contracts.

Question

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Forward rate agreements (FRAs) involve the agreement to exchange a fixed rate of interest for a variable rate of interest on a specified future date, based on a notional amount. This can be more complex than other OTC interest rate contracts like interest rate swaps or caps/floors, which involve the exchange of fixed and variable rates over a longer period of time. Thus, FRAs are considered among the more complicated OTC interest rate contracts.

The Forward Rate Agreement Is the Most Complicated of the OTC