What are "forward rate agreements"?

Answer by  Milee (106)

Forward rate agreements are used by banks and other financial institutes as a forward contract on short-term deposits. It is an over-the-counter contract between two parties that that determine the currency exchange rate or the interest rate that will be either paid or received to either party at a future start date that is also predetermined.

Answer by  Dea (73)

Forward rate agreements are contracts made on money. i.e. today, using USD, you buy a certain amount of EUR, paying it at a specific exchange rate, and you already agree in the contract that you will buy back the same amount of USD in a few days at a different rate.

Answer by  H89 (5)

An over-the-counter contract between parties that determines the rate of interest, or the currency exchange rate, to be paid or received on an obligation beginning at a future start date. The contract will determine the rates to be used along with the termination date and notional value.