If the FRA Has a ________ of 5% for Three-Month

Multiple Choice

If the FRA has a ________ of 5% for three-month LIBOR (the ________) and the notional amount is for $10 million, the buyer is agreeing to pay 5% to buy or borrow $10 million at the settlement date and the seller is agreeing to receive 5% to sell or lend $10 million at the settlement date.

A) settlement rate; contract rate
B) reference rate; contract rate
C) settlement rate; reference rate
D) contract rate; reference rate