Main Page | See live article | Alphabetical index A Forward Rate Agreement (FRA) is a contract where an agreed interest rate Rk applies to an agreed principal P for an agreed period of time, say between Ts and Te. Normally the pay-off is computed without waiting the interest period, by computing the future value of the FRA at Te, and using the actual rate R at Ts to discount the future value as follows: Payment = P . (1 + Rk)(Te-Ts)/( R. (Te-Ts) ) - P The times Ts and Te must be computed using an agreed interest rate basis. see also finance, option, interest rate swap, financial future This article is from Wikipedia. All text is available under the terms of the GNU Free Documentation License.