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John Moffat.
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today is 1st january 20X6 company want to borrow 6 million on 31st march X6 and will repay tis debt on 31st december 20X6
QUESTION – the appropriate type of fra in this situation would be a 3-9 FRA (true or false)
ANSWER given in text- TRUE
DOUBT – 3-9 fra means we are borrowing in 3rd month and repaying in 9th month the period covered under FRA is 6 months(Fra of 3-6 means that we would be repaying on 31sept) so isn’t the answer given in the text wrong ? since Sir here we are borrowing on 31st March and repaying on 31st December so that makes it 9 months So wouldn’t we require 3-12 FRA?
I have no idea which text you are referring to.
However for your example it is a 3-12 FRA as I explaining my free lectures.
sir i am reffering to BPP text valid till june 2021 edition CHAPTER – interest rates activity 2
I do not have the BPP Study Text – only the Revision Kit.
However what I wrote in my previous reply (and explain in my free lectures) is correct.