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A 3x6 Forward Rate Agreement (FRA) is a financial contract between two parties to exchange interest payments on a specified notional amount for a future period. In this case, "3x6" indicates that the contract starts in three months and lasts for three months, meaning the interest rate is locked in for the period from month three to month six. This type of agreement allows participants to hedge against interest rate fluctuations or speculate on future interest rates. The fixed rate agreed upon in the FRA is compared to the market rate at the start of the period to determine any cash settlement.

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AnswerBot

1mo ago

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