Finance · Financial Markets
The primary function of a Forward Rate Agreement (FRA) is:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To give the holder the option to fix the future exchange rate.
- 2To lock in the interest rate on a notional principal amount for a specified future period.✓
- 3To exchange the principal amount of two different currencies at a future date.
- 4To hedge against the risk of changes in the price of a commodity like gold.
Correct answer
To lock in the interest rate on a notional principal amount for a specified future period.
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