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Market Guides > Forward rate agreements

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Published: 15th September 2009 by William Webster

Forward rate agreements (FRAs) are contracts for difference. They are traded in the over-the-counter (bilateral or non-exchange) market. They allow the two parties involved to hedge or speculate on interest rates in the future. Perhaps the easiest way to understand a FRA is to break it down into a loan and deposit. Let's try.

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Document Summary

Forward interest rates, example. Forward rate agreements, what they are and how they work. Hedging example. Discounted settlement.

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