Common Contracts
1 similar Forward Rate Agreement contracts
Forward rate agreement pdfForward Rate Agreement • July 8th, 2023
A forward rate agreement (FRA) is an over-the-counter (OTC) contract between parties that determines the rate of interest to be paid on an agreed-upon date in the future. In other words, an FRA is an agreement to exchange an interest rate commitment on a notional amount. The forward rate agreement determines the rates to be used along with the termination date and notional value. FRAs are cash-settled. The payment is based on the net difference between the interest rate of the contract and the floating rate in the market—the reference rate. The notional amount is not exchanged. It is a cash amount based on the rate differentials and the notional value of the contract. Forward rate agreements (FRAs) are over-the-counter (OTC) contracts between parties that determine the rate of interest to be paid on an agreed-upon date in the future.The notional amount is not exchanged, but is a cash amount based on the rate differentials and the notional value of the contract.A borrower might want to
