Question: Helen $1000 for two years at a variable interest rate. She will make an interest payment to the lender at the end of each year

Helen $1000 for two years at a variable interest rate. She will make an interest payment to the lender at the end of each year and also repays $1000 at the end of 2 years. The one-year spot rate is 3% and the 2-year spot rate is 4%. She decided to enter into an interest rate swap to fix the interest rate for 2 years. Determine the level swap rate R.

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