A financial manager needs to hedge against a possible decrease in short-term interest rates. He decides to hedge his risk exposure by going short on an FRA that expires in 90 days and based on 90-day LIBOR. The current term structure for LIBOR is given in Table 1 below.

1. Identify the type of FRA used by the financial manager using the appropriate terminology.
2. Calculate the rate the manager would receive on this FRA.
3. It is now 30 days since the manager took a short position in the FRA. Interest rates have shifted down, and the new term structure for LIBOR is given in Table 2 below. Calculate the market value of this FRA based on a notional principal of $15,000.000.

TABLE 1: TODAY
Term (days)	LIBOR spot
30	5.83%
90	6.00%
180	6.14%
360	6.51%

TABLE 2: 30 days later
Term (days)	LIBOR spot
60	5.50%
150	5.62%
180	5.75%