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Long-Dated Forward Rate Agreement


A forward rate agreement (FRA) where the settlement date is more than one year in the future at the time of the transaction. The underlying FRA rate is an interest rate spanning a period of more than on year. Although a typical FRA is on short-term rates (the equivalent of exchange-traded futures on short-term interest rates), long-dated versions allow investors to go long term with specific obligations, with the FRA rate being determined at contract initiation.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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