What is the treasurer break-even forward rate of interest

Reference no: EM133332089

Question: The treasurer of a small bank has borrowed funds for 3 months at an interest rate of 5.50% and has lent funds for 9 months at 6.50%. The total amount is USD25 million. To cover his exposure created by the mismatch of maturities, the dealer needs to borrow another USD25 million for 6 months, in 3 months' time, and hedge the position now with an FRA. What is the treasurer's break-even forward rate of interest, assuming no other costs?

Reference no: EM133332089

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