Suppose that you expect to receive an inheritance of $10,000$ in one year. You will want to put this money then on a one$-$year deposit. Suppose further that, as of today, you are entering into a forward rate agreement to receive $4\%$ on $10,000$ for a one$-$year starting in one year. What is your gain$/$loss when the

realised one$-$year forward rate in one year is higher than $4\%?$ Provide a relevant example and explain your reasoning.

Answer rating: 100% (QA)

A forward rate agreement FRA is a financial contract between two parties that determines the interes... View the full answer