Question: A company entered into an FRA. The terms of the agreement provide that the company will receive a fixed rate of 6% on a principal of $100 million between the end of years 1 and 2. The LIBOR...

A company entered into an FRA. The terms of the agreement provide that the company will receive a fixed rate of 6% on a principal of $100 million between the end of years 1 and 2. The LIBOR rate for years 1 and 2 is 2.3079% and 3.4503%, while the forward rate at year 2 is 4.6055%. All rates are compounded annually. The value of the FRA is closest to:

Question 19 options:

−$1,303,032.

+$872,900.

+$1,303,032.