Demystifying Forward Rate Agreements (Calculations for CFA® and FRM® Exams)

Demystify Forward Rate Agreements (FRAs) for CFA® & FRM® exams. In this Concept Capsule, Nilay explains what an FRA is, the long (borrower) vs short (lender) positions, the X×Y naming convention (e.g., 1×4, 3×9), and how FRAs differ from standard forwards. Then we value a 1×4 FRA step-by-step: ST − F payoff, day-count de-annualization, notional usage, and discounting the payoff back to the FRA start using the market rate (e.g., 90-day LIBOR). Includes worked examples and exam tips to avoid common mistakes. AnalystPrep's Concept Capsules for CFA® and FRM® Exams This series of video lessons is intended to review the main calculations required in your CFA and FRM exams. For Level I Video Lessons, Study Notes, Question Bank, CBT Mock Exams & More: https://analystprep.com/shop/cfa-leve... For FRM (Part I & Part II) Video Lessons, Study Notes, Question Bank, CBT Mock Exams & More: https://analystprep.com/shop/unlimite... AnalystPrep is an Official GARP-Approved Exam Preparation Provider #ForwardRateAgreement #FRA #CFA #FRM #Derivatives #LIBOR #InterestRates #RiskManagement #QuantFinance #AnalystPrep