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What Is the Primary Difference between a Forward Rate Agreement and a Swap?

A Forward Rate Agreement (FRA) is a derivative contract to fix an interest rate for a future period on a notional principal amount, involving a single payment at maturity. A swap, such as an interest rate swap, is an agreement to exchange future cash flows based on two different interest rates (e.g. fixed for floating) over a period of time, involving multiple periodic payments.

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