Skip to Main Content
Derivatives and Risk Management, 1st Edition
book

Derivatives and Risk Management, 1st Edition

by Sundaram Janakiramanan
May 2024
Intermediate to advanced content levelIntermediate to advanced
542 pages
27h 26m
English
Pearson India
Content preview from Derivatives and Risk Management, 1st Edition
Forward Contracts 69
is amount would be received by the FRA buyer. us, the FRA buyer needs to borrow INR 5,000,000 –
INR 6,253 = INR 4,993,747. is amount would be borrowed at the market rate of 8.5%, and the amount
of interest to be paid would be:
4,993,747 ×
1 + 0.085 ×
92
360
= INR 5,102,222
If they had borrowed INR 5,000,000 at 8% at the AR, they would have had to pay back INR 5,102,222, as
calculated earlier. e FRA in both the cases results in the borrower paying an eective rate of the AR,
which is 8% in this example.
4.7.4 Uses of FRAs
FRAs are used by rms and nancial institutions to hedge against unexpected changes in in ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Derivatives and Risk Management

Derivatives and Risk Management

Madhumathi Madhumathi, Ranganatham Ranganatham
Derivatives and Risk Management

Derivatives and Risk Management

Sundaram Janakiramanan

Publisher Resources

ISBN: 9781299447547Publisher Website