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Hi , would you please tell me whats the meaning of :
3 v 4 7.45 – 7.34
3 v 7 7.53 – 7.43
4 v 7 7.53 – 7.45
and why the appropriate forward rate agreement is 3 v 7 agreement?
thank you.3 v 7 means a load starting in 3 months and finishing in 7 months.
(The loan in the question starts in 3 months and lasts for 4 months, and so this is the appropriate FRA).The reason for two interest rates is that the lower one is for depositing and the higher one is for borrowing.
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