Folks , I finally understood this short form way the FRA is represented . Say 2 x 5 , it means 60 days to the initiation of the FRA and 150 days to expiry. Num days for numerator is 2nd number ( * 30) while first is num days for denominator
congrats mate…
Janakisri, Draw a timeline will be easier to understand. Just one correction, FRA contract will expire in 60 days for a 90 day loan. In other words, long need to pay the fixed periodic interest for 90 day loan at day 150 starting from today. However, FRA contract can be settled at day 60 by discounting the future payments.
I just do a time line and don’t think of the formula…I also don’t use the value formula, I just work with prices and it’s easier that way.