Difference between revisions of "FRA"
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| − | A '''forward rate agreement (FRA)''' is an interest-rate [[derivative]] allowing investors to set in advance an interest rate on an investment or [[loan]], while protecting the investors against risk. The FRA requires no upfront payment, and is collected when the instrument matures or expires. | + | A '''forward rate agreement (FRA)''' is an interest-rate [[Derivative (calculus)|derivative]] allowing investors to set in advance an interest rate on an investment or [[loan]], while protecting the investors against risk. The FRA requires no upfront payment, and is collected when the instrument matures or expires. |
In essence an FRA is a bet on interest rates. | In essence an FRA is a bet on interest rates. | ||
[[Category:Finance]] | [[Category:Finance]] | ||
Latest revision as of 21:13, September 8, 2020
A forward rate agreement (FRA) is an interest-rate derivative allowing investors to set in advance an interest rate on an investment or loan, while protecting the investors against risk. The FRA requires no upfront payment, and is collected when the instrument matures or expires.
In essence an FRA is a bet on interest rates.