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a forward rate agreement is an over-the-counter contract with a fixed interest rate that will apply to borrowing or lending a certain amount during a specified future time period now letamp;#39;s talk about why someone might use a forward rate agreement so letamp;#39;s say and looking at this timeline down here we can see that we have time and years zero being today letamp;#39;s say that Iamp;#39;m a large company and I know that as of today Iamp;#39;m going to need to borrow $100 million 2 years from now so thatamp;#39;s when my loan that Iamp;#39;m borrowing at would begin and I need hundred million but Iamp;#39;m only going to need it for 6 months so that means 2 and 1/2 years from today is when that loan would expire so Iamp;#39;m planning on borrowing for 6 months in this period of time one thing that I could do is I could just go through my normal course of business and just wait two years let time pass into the future until it gets to 2 years from now then at 2 years fr