Can somebody help me reconstruct the steps to go about solving this problem. 1. I calculated R110 and R20 (periodic rates) and got the price of the FRA 2. What’s the next step? how do we make us of the notional. What is the value of a 6.00 percent 1x4 (30 days x 120 days) forward rate agreement (FRA) with a principal amount of $2,000,000, 10 days after initiation if L10(110) is 6.15 percent and L10(20) is 6.05 percent? A) $745.76. B) $700.00. C) $767.40. D) $826.46.
Probably doesn’t help, but I just plug and chug into that long formula. (1/(1+(.0605*(20/360)))) - ((1+(.06*(90/360)))/(1+(.0615*(110/360)))) *2,000,000 = 743.75 So due to rounding A?
Niblita how happy are you going to be when you see an FRA question on the actual exam. YOu have that section on lock. I get nearly the same: 743.45 T/G
Got it! It took me a while to disect Nib’s code (Unlock the Code - Da Nib’s Code). The ans is A (and God’s there to confirm the same too…)
I hope so. Funny, L1 I dreaded them and didn’t do well with them. I thought I would be screwed this year for L2. They just seemed to click like a month ago.
I am going to need some help on those in the near future. I might call on you Nib.
don’t worry mwvt9 - let me know when you are ready. We will do a Furures/Fwd/Options/Swap thread for review out here. with Nib leading the torch.
Dinesh, I came up with a little plan the other day because I was nervous that everybody was taking tests already and I wasn’t. So I have only reviewed the sections that are on the first free sample exam from the CFA: FSA Equity Quant Econ Ethics I will take it in the next few days. That way I will have a test under the belt and see if my revision is working without having to wait so long to take a test (and I will have more time to change my strat if necessary). I just thought I would share that since we are kind of in the same boat. So as soon as I am done with that test I will be read for the derivatives thread.
Way late but; 743.7545, A.
mwvt9 - sounds like a plan! I am on ventilation past few days and the cardiogram spikes out when I see people posting their scores. I see myself as way behind. I have still to review the following 1. FI-SS15 2. Der-SS16 3. Der-SS17 4. PM-SS18 And do SS1 and SS2 for the 1st time. If I find myself out of breath, then I too will need to change my plan as per yours and take test-1 ASAP just to get the feel of things. I have kept the next week to complete all of this. If by chance the RED-PAINC button is pressed, then I will evacuate the Schweser books immediaely and take the CFAI emergency exit out by taking the FREE sample exam
Nib - I wrote a nearly identical formula as you, except I didn’t get the FRA’s day count right, and got back a way different answer. Must remember to self: FRA day count = (FRA’s life / 360)
Am I the only one left that has not done an exam yet? Now I feel like I’m behind…
no exam yet - going for my first (Schweser) tomorrow. will get killed on Derivs.
me too, im doing my first Schweser tomorrow. I’m sure you’ll do great besides if you just get killed in deriv its only 10% so a 90% doesn’t sound too bad 
Thank you for assuming I’ll get everything else right! I’m pretty sure I’ll get killed on the format alone. Not my kind of test. Qbank is not a really good way of prepping either in my view.
I agree, I’m saving Qbank for only if I have done all the exams and I have nothing left. I think the concept checkers are good review until you dive into a nice exam.