Janice Grass, CFA, created a gourmet baby food line. To get the production lines up and running, she must borrow $12 million. Grass is concerned that the US
Federal Reserve (Fed) will raise interest rates dramatically, so she enters into a 2 x 8 FRA agreement. The FRA is quoted at 6%. LIBOR interest rates on the expiration day of the FRA are presented in the table below.
Based on the table, calculate the payoff on Grass' transaction.
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A. B. C.A