Answer: 2.49%.

## Explanation For a 3 × 6 FRA, we need to calculate the forward rate starting in 3 months for a 3-month period. **Formula for FRA rate:** \[ FRA = \left[ \frac{(1 + L_2 \times \frac{t_2}{360})}{(1 + L_1 \times \frac{t_1}{360})} - 1 \right] \times \frac{360}{t_2 - t_1} \] Where: - \( L_1 \) = 3-month rate = 1.50% = 0.015 - \( L_2 \) = 6-month rate = 2.00% = 0.02 - \( t_1 \) = 90 days (3 months) - \( t_2 \) = 180 days (6 months) **Calculation:** \[ FRA = \left[ \frac{(1 + 0.02 \times \frac{180}{360})}{(1 + 0.015 \times \frac{90}{360})} - 1 \right] \times \frac{360}{180 - 90} \] \[ FRA = \left[ \frac{(1 + 0.02 \times 0.5)}{(1 + 0.015 \times 0.25)} - 1 \right] \times \frac{360}{90} \] \[ FRA = \left[ \frac{1.01}{1.00375} - 1 \right] \times 4 \] \[ FRA = [1.00623 - 1] \times 4 \] \[ FRA = 0.00623 \times 4 \] \[ FRA = 0.02492 = 2.492\% \] The calculated FRA rate of 2.492% is closest to **2.49%** (Option C).

Author: LeetQuiz Editorial Team