Forward Rate Agreement Interpretation

CFA Level I Derivatives
#1

hi, how you interpret the answer based on the FRA formula.

my guess is the formula is in the long’s perspective. if the answer is positive, then the short would have to pay and if negative the long owes? is that correct?

for forward contracts, would this same formula and interpreation apply?

#2

Think of it as the long is borrowing at the FRA rate.

If rates move down, he is a loser. He is stuck paying the higher FRA rate.

If rates move up, he is a winner. He has locked in the lower FRA rate.