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You have a USD loan that is priced at 3-month LIBOR+50.

You have a USD loan that is priced at 3-month LIBOR+50. LIBOR for the loan will be re-fixed in exactly one month. The market is quoting:

1x3 USD FRA. 1.95-98%

1x4 USD FRA. 2.07-10%

1x6 USD FRA 2.25-28%

To hedge the next LIBOR fixing, you should:

A.

Sell a 1x3 FRA at 1.95%

B.

Buy a 1x3 FRA at 1.98%

C.

Buy a 1x4 FRA at 2.10%

D.

Sell a 1x4 FRA at 2.10%

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