Answer-What is a Forward Rate Agreement (FRA)?

A Forward Rate Agreement FRA is an OTC contract where one party the long side agrees to pay a fixed interest rate on a notional principal at a future date, and the other party the short side agrees to pay a floating interest rate on the same notional principal on the same future date. This arrangement allows both parties to hedge against interest rate fluctuations.

Question

What is a Forward Rate Agreement (FR

A A contract that allows one party to buy or sell a commodity at a predetermined price in the future

B An agreement where both the parties agrees to pay a fixed interest rate on a notional amount in the future

C A contract that grants the right but not the obligation to buy or sell an asset at a specified price before a certain date

D An OTC contract where one party agrees to pay a fixed interest rate and the other agrees to pay a floating interest rate on a notional amount in the future

E A standardized agreement to exchange an asset at a predetermined price at a specified time in the future

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