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What is the value of the fra

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The half-year LIBOR rate is 3.5% and the one-year LIBOR rate is 6%. Suppose that some time ago a company entered into an FRA where it will receive 5.8% and pay LIBOR on a principal of $1 million for the period between time 0.5 years and time 1 year in the future (with semiannual compounding). The one-year risk-free rate is 4%. What is the value of the FRA? All rates are compounded continuously unless specified.

Reference no: EM132645717

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