Find the rate on a pure discount loan hedged with a long FRA if the loan is for $10 million and matures in 30 days,the FRA is 30-day LIBOR,the fixed rate on the FRA is 4 percent,and LIBOR at the time the loan is taken out is 5 percent.
A)4.87 percent
B)0.25 percent
C)5.18 percent
D)4.13 percent
E)2.04 percent

Question

Quizplus · Accepted Answer

The Answer of Find the rate on a pure discount loan hedged with a long FRA if the loan is for $10 million and matures in 30 days,the FRA is 30-day LIBOR,the fixed rate on the FRA is 4 percent,and LIBOR at the time the loan is taken out is 5 percent.
A)4.87 percent
B)0.25 percent
C)5.18 percent
D)4.13 percent
E)2.04 percent

Find the Rate on a Pure Discount Loan Hedged with a Long