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Understanding and valuing FRAs
I don't know about you guys, but I tend to have a mental seizure when I look at forward rate agreements.
I get the notation: e.g. a 2x3 FRA means a 30 day loan in 60 days. Right.
However, I then read that for the same 2x3 FRA, 40 days after initiation means that there are 20 days remaining until the FRA expires.
Shouldn't it be 20 days after the FRA initiates, and 50 days after the FRA expires?
Also, can anyone walk share their thought process on how to value FRAs? I'm trying to fight my way out of the jargon filled explanations given. I've a feeling it's not hard to get, once I 'get it'...
Thanks guys! Hope revision is going well.