In order to hedge its interest rate risk for loans starting 3 months from now, ExxonMobil's treasury department entered into a 3x5 forward rate agreement (FRA) with Barclays with a notional of $100mm where LIBOR plus 50 basis points was the reference rate and the forward rate agreement rate was 7%. 

If Libor dropped to 4% in 3 months, what transfer would be made on the settlement date?

Answer rating: 100% (QA)

To calculate the settlement amount on the forward rate agreement ... View the full answer