The treasurer of Fidelity Bank Limited expects to receive $200 million from a loan repayment in six months, which will be invested for six months in an appropriate financial asset. Assuming a 360-day year, the current contract rate for such an FRA is 5% per annum. Assume further that the settlement rate will be 3% per annum in six months. 

Calculate the FRA contract's settlement value.

Answer rating: 100% (QA)

To calculate the settlement value we need to consider the notional amo... View the full answer