Assume that a bank can borrow or lend at the rates in problem 4

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Assume that a bank can borrow or lend at the rates in problem 4.5. What is the value of a Forward Rate Agreement, where the bank will pay 7.2% for a 3-month period starting in half a year on a principal of US$1,000,000?

1. A million US Dollars.
2. Eight Hundred Thousand US Dollars.
3. Six Hundred Thousand Dollars.
4. Four Hundred Thousand Dollars
5. Two Hundred Thousand Dollars
6. Zero. We know that one can enter a Forward Rate Agreement at no cost.