On June 6th 2011, Alfred was advised by his bank that his application for a bill acceptance facility that would allow him to issue 120-day bank bills with a total face value of $750,000 in December 2011, was successful.These will be sold to yield +0.5% p.a.Concerned that interest rates may rise before the bills are issued on December 6th, Alfred assembled the following Forward Rate Agreement quotations payable against the reference rate.Forward Rate Agreement Lender Borrower6/9 6.5% p.a. 7.5% p.a.6/10 6.6% p.a. 7.6% p.a.9/12 6.9% p.a. 7.9% p.a.10/13 7.0% p.a. 8.0% p.a.

Clearly state how Alfred should use an Forward Rate Agreement to hedge his exposure, and calculate the amount, direction, and date of the payment at settlement if, on the settlement date is 6.1% p.a.