Forward Rate Agreement replication

CFA Level II Derivatives
#1

Hello,

Can someone explain to me precisely pls, why a long position in a Forward Rate agreement = Long IR Call + Short IR Put?
Thank you

#2

Draw the diagram of a call
Draw the diagram of a put
Draw the diagram of a call and a put on the same chart
Draw the diagram of a long FRA

Do they look the similar?

Get out excel.
Pick a strike rate say 5%
Work out the payoffs of combination calls and puts under different interest rates
Do the same for FRA
Do they look similar?

#3

Yes, they look similar. It’s clear now.
Thank you.