Mon. Jun 21st, 2021
    Forward Rate Agreement

    Forward Rate Agreement (FRA) is an agreement between the borrower and the lender on the loan amount and interest rate. In this case, if the current reference rate (which the parties were guided by) exceeds the agreed rate, the borrower undertakes to compensate for the difference to the lender.

    Thanks to the FRA, the lender will profit from the loan anyway. Compensation is calculated on the transaction date, i.e. the repayment of the loan with interest.