1 - FRAs vs STIRs

0.0(0)
Studied by 0 people
call kaiCall Kai
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
GameKnowt Play
Card Sorting

1/5

encourage image

There's no tags or description

Looks like no tags are added yet.

6 Terms

1
New cards

what is a FRA

forward rate agreement

2
New cards

show an example of a 3v6 FRA

.

<p>.</p>
3
New cards

what is a stir

short term interest rates

4
New cards

how can u use stir to hedge

concern: rising rates

hedge: short stir


and vice versa

5
New cards

what is the formula for a stir price

100 - implied IR

6
New cards

3 differences between FRA and STIR

FRA:



more flexible


works on rates


OTC

STIR:



less flexible (3mo)


priced


on exchange