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Forward Rate Agreement Long Short Position

by Simone / 09-12-2020
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Forward Rate Agreements (FRA) are over-the-counter contracts between parties that determine the interest rate payable at an agreed date in the future. An FRA is an agreement to exchange an interest rate bond on a fictitious amount. That must be true, but can someone help me understand how? Suppose the fra rate is 8% and LIBOR has fallen to 7%, a 1% payment is made, right? The fictitious amount of $5 million will not be exchanged. Instead, both parties to this transaction use this figure to calculate the interest rate difference. In other words, a Discount Rate Agreement (FRA) is a short-term, tailored and agreed-upon financial futures contract. A transaction fra is a contract between two parties for the exchange of payments on a deposit, the notional amount, which must be determined later on the basis of a short-term interest rate called the benchmark rate over a predetermined period. FRA transactions are introduced as a hedge against changes in interest rates. The buyer of the contract blocks the interest rate to protect against an interest rate hike, while the seller protects against a possible drop in interest rates. At maturity, no funds exchange hands; On the contrary, the difference between the contractual interest rate and the market interest rate is exchanged. The purchaser of the contract is paid when the published reference rate is higher than the fixed rate agreed by contract and the buyer pays the seller if the published reference rate is lower than the fixed rate agreed by contract.

A company trying to guard against a possible interest rate hike would buy FRAs, while a company seeking interest coverage against a possible interest rate cut would sell FRAs. FRAP(R-FRA) ×NP×PY) × (11-R× (PY)) where:FRAP-FRA paymentFRA-Forward rate miss rate, or fixed rate that is paid, or variable interest rate used in the nominal nP-capital contract, or amount of the loan that applies interest on period, or number of days during the term of the contractY-number of days per year based on the correct daily counting agreement for the contract , “Begin” und “””FRAP” = “links” ( “frac” ( R – “Text” left ( links ( , 1 , 1 + R, x , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , oder feste Zinsen, die bezahlt werden, &R = “Text” oder “Floating-Zinssatz”, der in dem Vertrag verwendet wird, &,”Text” &NP = “Text” oder “Notionaler Kapitalbetrag” oder “Betrag” des Darlehens, auf das die Zinsen angewendet werden. , oder Anzahl der Tage in der Vertragslaufzeit , &Y = “Text” (“Anzahl der Tage im Jahr” basierend auf der korrekten Konvention für den Vertrag , “Text” and “Daily Counting” for the contract, FRAP(Y (R-FRA) ×NP×P) × (1-R× (YP)1) where:FRAP-FRA paymentFRA-Forward rate agreement rate, or fixed interest rate that is paid, or variable interest rate used in the nominal default contract, or amount of the loan that interest is applied over the period P-period, or number of days during the term of the contractS-number of days per year on the basis of the correct daily agreement for the Contract. namely the buyer and seller.

Full Stack Web Developer and Audio Engineer. Ha collaborato a diversi progetti con l'Istituto Nazionale di Fisica Nucleare (INFN-LNF) e un progetto sulle reti neurali in compartecipazione con: Università di Roma Tor Vergata, Centro di Tecnologia Biomedica di Madrid, Università Complutense e Politecnico di Madrid.

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