Suppose a forward rate agreement (FRA) calls for the exchange of six-month LIBOR one year from now for a payment of a fixed rate of interest of 8%. In other words, pay floating and receive fixed. Shoudln’t this be a FIXED PAYER not a FIXED RECEIVER as stated in the text above?
***pay floating and receive fixed*** So that means, you are paying floating, so you are receiving Fixed. Hence CFAI is correct - it should be FIXED RECEIVER
BUT the question says “Suppose a forward rate agreement (FRA) calls for the exchange of six-month LIBOR one year from now for a payment of a fixed rate of interest of 8%.” You are going to GET FRA calls for a PAYMENT OF A FXED rate Doesn’t that mean FIXED PAYER?
No. You are exchanging the LIBOR payments (read giving) for a payment (read receiving) of a fixed rate. Fixed rate receiver.