Definitions for "Forward Rate Agreements"
see also Interest Rate Swap) A forward rate agreement is a cash-settled obligation on interest rates for a pre-set period on a pre-set interest rate index with a forward start date. A 3x6 FRA on US dollar LIBOR (the London Interbank Offered Rate) is a contract between two parties obliging one to pay the other the difference between the FRA rate and the actual LIBOR rate observed for that period. An Interest Rate Swap is a strip of FRAs.
Contracts fixing an interest rate to be paid or received on a notional principal of specified maturity commencing on a specified future date.
FRA`s are transactions that allow one to borrow/lend at a stated interest rate over a specific time period in the future.