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Sir in your lectures you have said that we wont be asked numbers on interest risk management but here in part a he is asking us to evaluate?
Yes, but it is only an FRA and you are expected to know what an FRA is (just as you are expected to know what the other methods are – without calculations).
The only calculation needed here was to calculate the effective amount of interest and working out the interest at 4.5% per year is not difficult (and of course you can be expected to calculate interest – calculating interest itself is not directly related to risk management).
The rest of the calculations are not necessary to get the marks, but the explanation (that you pay the actual rate and then settle up the difference) is needed and is explained in the lectures.
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