greetings there,
quite a few associates turn to me as to forward rate agreement.
Forward rate agreement means an over-the-counter contract between parties that determines the rate of interest, or the currency exchange rate, to be paid or received on an obligation beginning at a future start date. The contract will determine the rates to be used along with the termination date and notional value. On this type of agreement, it is only the differential that is paid on the notional amount of the contract.
Also known as a "future rate agreement".
Typically, for agreements dealing with interest rates, the parties to the contract will exchange a fixed rate for a variable one. The party paying the fixed rate is usually referred to as the borrower, while the party receiving the fixed rate is referred to as the lender.
For a basic example, assume Company A enters into an FRA with Company B in which Company A will receive a fixed rate of 5% for one year on a principal of $1 million in three years. In return, Company B will receive the one-year LIBOR rate, determined in three years' time, on the principal amount. The agreement will be settled in cash in three years.
If, after three years time, the LIBOR is at 5.5%, the settlement to the agreement will require that Company A pay Company B. This is because the LIBOR is higher than the fixed rate. Mathematically, $1 million at 5% generates $50,000 of interest for Company A while $1 million at 5.5% generates $55,000 in interest for company B. Ignoring present values, the net difference between the two amounts is $5,000, which is paid to Company B.
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Canadian Currency Exchange » research of currency value
definition of a web based forex sites term
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Posted 4 months ago #
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what parker1979 said
Posted 4 months ago # -
apparently the effect of the market's weakening on the TRY in Indonesia emerged through the fact that the machine tool industry are about to to come down and cause updates in the TRY-IDR rates (which if true) may account for the penitence of the TRY.
Posted 4 months ago #
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