# Forward Rate Agreement (FRA)

*Markets & Instruments — Finicade finance glossary*

A contract to lock in an interest rate on a future loan or deposit. At settlement, only the difference between the agreed rate and the actual market rate changes hands — a clean way to hedge rate risk.

**Also known as:** fra

**Related terms:** [Forward Contract](https://finicade.com/glossary/forward-contract), [Interest Rate](https://finicade.com/glossary/interest-rate), [Swap](https://finicade.com/glossary/swap)

**Taught in:** Quant Quest — Interest Rate Instruments II

Source: https://finicade.com/glossary/forward-rate-agreement