CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

A forward rate agreement is an agreement to buy or sell ______.
A. an interest rate contract linked to, say, LIBOR
B. an equity contract
C. a foreign exchange contract
Explanation: A forward rate agreement is based on an interest rate. One side buys the rate and the other side sells the rate. At settlement, the difference between the contractual rate and actual rate is settled by indexing the amount to a notional principal.

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