Question

What is a Forward Rate Agreement (FRA) used for?

a.

Buying and selling stocks

b.

Speculating on currency exchange rates

c.

Managing interest rate uncertainties

d.

Hedging against commodity price fluctuations

Posted under IC 89 Management Accounting

Answer: (c).Managing interest rate uncertainties Explanation:A Forward Rate Agreement (FRA) is a contract used to manage interest rate uncertainties. It allows the buyer to pay a fixed rate of interest six months after purchase, helping to stabilize earnings in the face of potential interest rate changes.

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Q. What is a Forward Rate Agreement (FRA) used for?
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