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12/06-FNDC-FRA

Ddragon7610y ago
Dear John, Just to ensure my understanding, in this question, the FRA outcome should be 7.1 % eg 5.85%+1.25% not 5.85% only as the BPP answer, pls. clarify Much thanks
John MoffatJohn MoffatTutor10y ago#1
No - the FRA offered by the bank would already have taken into account the 1.25%.
Ddragon7610y ago#2
Dear John, I would be appreciate should you could make it more clearer due to normally, the Credit Risk Premium depend on the Credit Rating of an individual Company, and the Premium are not affected by hedging, therefore the Lock in Rate should be adjusted by the rate, pls. advise Much thanks
John MoffatJohn MoffatTutor10y ago#3
With FRA's the bank will be quoting a rate specifically for the particular customer and will therefore have taken into account the credit rating when they give the quote.
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