 # FRA Notation

Can someone explain what a 3 x 6 FRA represents? Also in general how to interpret these?

settlement after 3 months on a 6 months loan starting on the day of settlement.

3 means the length of the FRA, 6 represents total time total time= length of FRA + time of LIBOR ex. a 90 day FRA with 90 day LIBOR is a 2X6 FRA

a 90 day FRA with 90 day LIBOR is a 2X6 FRA sorry should be a 90 day FRA with 90 day LIBOR is a 3X6 FRA

I was wrong… That still doesn’t make a lot of sense to me; So you are saying that first number is the length of fra (in months i’m assuming) and the second is the total time. so with 3x6 FRA; 3 months is the length of the FRA and 6 months is the total time however: 90 day fra with 90 day libor is 3x6 FRA? Can someone just please clarify?

mambovipi Wrote: ------------------------------------------------------- > That still doesn’t make a lot of sense to me; > > So you are saying that first number is the length > of fra (in months i’m assuming) and the second is > the total time. > > so with 3x6 FRA; 3 months is the length of the FRA > and 6 months is the total time however: 90 day fra > with 90 day libor is 3x6 FRA? > > Can someone just please clarify? right

mambo, the first number represents the length of time in 30 day denominations for the FRA itself, so for 3 it’s 90 days the 2nd number = the length of time for the FRA + the length of time for LIBOR so in your case it’s 3 + 3 = 6 you could very well have a 30 day FRA (1) + 90 day LIBOR (3) = 1x4 FRA

okay so what would 3 x 7 FRA mean? 3 month FRA…

3 month FRA for a 4-month loan

Got it thanks