1. Explain the statement that ‘a swap is a portfolio of FRAs’.?
2. Compare the advantages and disadvantages of using forward rate agreements (FRAs) and short-term interest rate futures contracts (STIRs) to manage interest-rate risk.
3. What is the difference between an annual percentage rate (APR) and an effective annual rate (EAR)? When are they the same? When you apply for a loan, which one should be of more interest to you?