4. Consider a four-year interest rate swap. The swap rate is k percent and denote the floating rate by rt-1,t with r0,1=3%, r0,2=4%, r0,3=4.5%, and r0,4=5%.

a. Calculate the swap rate k.

b. Suppose next year the term structure is r0,1=2%, r0,2=3%, r0,3=3.5%, and r0,4=4%. The notional amount is 100. What is the value of the swap at t=1 (after the first cash flow has been exchanged) from the perspective of the fixed rate receiver?