easy · FRM Part 1 Financial Markets and Products
What is the primary difference between a 'swap' and an 'FRA'?
- FRAs trade only on exchanges, while swaps trade over the counter.
- FRAs reference only a fixed rate, while swaps reference only a floating rate.
- An FRA is a single-period contract, whereas a swap covers multiple periods.
- Swaps require an exchange of principal at maturity; FRAs never involve principal exchange.
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