Forward rate agreements are individual financial instruments in which the vendor and purchaser specify an interest rate that is to apply for a future period. The FRA is based on a fictitious money market transaction. The principal is only a calculation quantity. A "3 to 9" FRA has a contract validity period of 6 months and the start of term is in 3 months. Two days before the start of the term of the FRA, the contract is settled and the difference between the agreed interest rate and the reference interest rate is netted off.

t₀: Date of the conclusion of the business transaction

t₁: Date of the calculation of the interest rate adjustment (2 days before the start of the term of the FRA)

t₂: Start of the term of the FRA and payment of the clearing amount

t₃: End of term of the FRA