A person borrowed $1000 for 4 years at a variable interest rate They will make an interest payment to the lender at the end of each year and also repays $1000 at the end of 4 years The spot rates are as follows Time to Maturity spot rate 1 3 4 2 3 7 3 4 3 4 4 6 The person decided to enter into an interest rate swap to fix the interest rate for 4 years Determine the level swap rate R Enter your answer as a decimal to four decimal places e g if the swap rate is 5 62 , you would enter 0 0562

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Question: A person borrowed $1000 for 4-years at a variable interest rate. They will make an interest payment to the lender at the end of each

A person borrowed $1000 for 4-years at a variable interest rate. They will make an interest payment to the lender at the end of each year and also repays $1000 at the end of 4 years. The spot rates are as follows:

Time to Maturity	spot rate
1	3.4%
2	3.7%
3	4.3%
4	4.6%

The person decided to enter into an interest rate swap to fix the interest rate for 4 years. Determine the level swap rate R. Enter your answer as a decimal to four decimal places. e.g. if the swap rate is 5.62%, you would enter 0.0562.

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