Contract the underlying libor for six months

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Consider a 6×12 FRA where the underlying six-month period is 183 days and the notional is $100. The FRA fixed rate is 5%. At maturity of the contract the underlying Libor for six months is 7%. What is the settlement amount on the FRA (recall that FRAs are settled in present-value)? Assume the Actual/360 convention.

Note:I would appreciate it if any of you guys could show the equation so I can understand the problem.

Reference no: EM131872177

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