Question: Suppose you are long a 180-day LIBOR-based FRA (receive floating) with notional amount of $50,000,000. At expiration, LIBOR is 4 percent and the strike rate

Suppose you are long a 180-day LIBOR-based FRA (receive floating) with notional amount of $50,000,000. At expiration, LIBOR is 4 percent and the strike rate (the agreed-upon rate) is 3 percent. Assuming a 360-day year, what is the dollar profit or loss on this FRA? How would your answer change if you were short (receive fixed)? Is your answer to this question twice the amount of the previous question? Why or why not?

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