alleryStart learning →A borrower buys an FRA at 7%. Its loan resets at 9%. Effective cost is about?
AAbout 7%
BAbout 16%
CAbout 2%
DAbout 9%
Answer & Solution
Correct answer: A. About 7%
The FRA pays roughly the 2% excess over 7%, offsetting the loan cost and leaving about 7%.
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Related questions
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