Question: A company issues a five-year $100M variable rate bond with the following term structure: t (years) Variable Annual Rates 1 6.25% 2 7.00% 3 6.50%

A company issues a five-year $100M variable rate bond with the following term structure: t (years) Variable Annual Rates 1 6.25% 2 7.00% 3 6.50% 4 7.25% 5 7.00% Calculate the swap rate (R) and calculate the swap payments, payments to the bondholder who agreed to receive variable payments in lieu of swap payments

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