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. Forward rate in the second year f =4%. Annual compounding applies. Which is the correct equation from which to solve for the two-year spot rate s₂?

	a.	(1 + 0.03)*(1 + s2) = (1 + 0.04)2
	b.	(1 + 0.03)*(1 + 0.04) = (1 + s2)2
	c.	(1 + 0.03)*(1 + s2) = (1 + 0.04)
	d.	(1 + 0.03) / (1 + 0.04) = (1 + s2)2