Which of the following is equivalent to a receive-fixed swap with a tenor of one and a half years with semi-annual swap payments and a fixed rate of 5 percent (exchanged for LIBOR)? Assume that the notional principal is $10,000,000. A) A strip of two forward rate agreements, which obligates the party to receive a fixed rate of 5% and pay six-month LIBOR on a notional principal of $10,000,000. B) A forward rate agreement, which obligates the party to receive a fixed rate of 5% and pay six-month LIBOR on a notional principal of $10,000,000. C) A forward rate agreement, which obligates the party to pay a fixed rate of 5% and receive six-month LIBOR on a notional principal of $10,000,000. D) A strip of three forward rate agreements, which obligates the party to receive a fixed rate of 5% and pay six-month LIBOR on a notional principal of $10,000,000. Your answer: D was incorrect. The correct answer was A) A strip of two forward rate agreements, which obligates the party to receive a fixed rate of 5% and pay six-month LIBOR on a notional principal of $10,000,000. This is an example of two 6 month FRAs. The first FRA is entered into at time 0 with the payment determined at 6 months and paid at 12 months. The second FRA is entered into at 6 months with the payment determined at 12 months and paid at 18 months. - why isnt D the answer… in fact in A, ultimately only two payments will be made… however, as per the original swap three payments will be made… thanks in advance…

thank u so much for your help… actually I am lagging behind others… so didnt realise this was already discussed…