Analyze a two-year swap agreement to exchange LIBOR for fixed-rate payments on a $100 million notional principal. The first payment will be made in one year; the second in two years. You have the following information on LIBOR rates: One-year spot rate s1=3% per year. Two-year spot rate is s2 =4%. Annual compounding applies. Which is the correct equation from which to solve for the forward rate in the second year, f?

a. (1 + 0.03)*(1 + 0.04) = (1 + f)2

b. (1 + 0.03) / (1 + 0.04) = (1 + f)2

c. (1 + 0.03)*(1 + f) = (1 + 0.04)

d. (1 + 0.03)*(1 + f) = (1 + 0.04)2