Find the rate on a pure discount loan hedged with a long FRA if the loan is for $10 million and matures in 30 days, the FRA is 30-day LIBOR, the fixed rate on the FRA is 4 percent, and LIBOR at the time the loan is taken out is 5 percent.
1. 4.87 percent
2. 0.25 percent
3. 5.18 percent
4. 4.13 percent
5. 2.04 percent