Consider a FRA where IBM agrees to borrow $100 mil. from a dealer for 6 months starting in 4 years. The contractual FRA rate is 5.5% per annum. Assume that in 4 years the actual 6-month LIBOR is 7.5%...

Consider a FRA where IBM agrees to borrow $100 mil. from a dealer for 6 months starting in 4 years. The contractual FRA rate is 5.5% per annum. Assume that in 4 years the actual 6-month LIBOR is 7.5% per annum. The FRA is settled when ________ pays _______ the amount of _________.

1. IBM; dealer; $1,000,000


2. dealer; IBM; $1,000,000


3. IBM; dealer; $963,855


4. dealer; IBM; $963,855


5. dealer; IBM; $36,145