Compute the initial value of a forward-starting swap that begins att=1, with maturityt = 10 and a fixed rate of 4.5%. (The first payment then takes place att = 2 and the final payment takes place att = 11 as we are assuming, as usual, that payments take place in arrears.) You should assume a swap notional of 1 million and assume that you receive floating and pay fixed.)

should be answered by building ann=10-period binomial model for the short-rate ri,j. The lattice parameters are:r_{0,0} = 5\%

r0,0=5%,u = 1.1,d = 0.9 andq =1-q = 1/2.

Submission Guideline:Give your answer rounded to the nearestinteger. For example, if you compute the answer to be -220,432.23, submit -220432.