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I'm not sure if FRAs should be calculated with annual interest or with monthly interest. Example:

Amount : 10.000

Interest rate contracted: 10% per annum.

Period-term to 3 months within 3 months.

Interest rate in the market within 3 months: 1% monthly.

So this is a: $FRA(3,6)$

Should I convert the $10$% to quarterly interest and the $1$% to quarterly interest, or the $1$% to annual, in order to solve this FRA?

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    $\begingroup$ well a 3M FRA settles to 3M Libor so what is the market expected 3M Libor rate over your specific dates? Having knowledge of 1% rate per month seems distracting to me. $\endgroup$ – Attack68 Jan 19 at 19:06

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