Interest rate agreement

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Interest rate agreement

An over the counter agreement whereby one party, for an up-front premium, agrees to compensate the other at specific time periods if a designated interest rate (the reference rate) is different from a predetermined level (the strike rate.) Also called a FRA (pronounced like ‘draw’) or forward rate agreement.

Interest Rate Agreement

A transaction between two investors in which one (Investor A) agrees to compensate another (Investor B) if a certain variable interest rate, known as the reference rate, rises above some agreed-upon strike rate. Investor A makes this compensation at certain periods of time over the life of the agreement each time the reference rate exceeds the strike. In exchange, Investor B gives Investor A a premium or purchase price for the agreement. See also: Interest rate swap.
References in periodicals archive ?
The framework agreement will not include loans in the obligation and certificates market and interest rate agreements.
Called swaptions for short, these interest rate agreements are usually designed to cushion debt payments in case interest rates rise.
119 specifically mentions -- * interest rate swaps * interest rate caps * forward interest rate agreements * option contracts * interest rate collars * interest rate floors * futures contracts * fixed rate loan commitments * commitments to purchase stocks or bonds
The framework agreement will not include loans in the obligation and certificate market and interest rate agreements.
The framework agreement will not include loans in the obligation and debenture market and interest rate agreements.