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Dana entered into a four-year interest rate swap with Fred one year ago. She agreed to pay the swap rate for the variable rate. They

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Dana entered into a four-year interest rate swap with Fred one year ago. She agreed to pay the swap rate for the variable rate. They exchange interest payments at the end of each year during the swap term. The swap rate they agreed upon is 5.0%, and the notional amount is 10,000. Today, the spot rates are: Time,t Spot Rate, si 4.00% 1 2 5.50% 3 6.00% 4 7.00% 5 8.00% From Fred's perspective, if he exits the interest rate swap today, what is the market value of the swap? A -640 B -254 125 D 254

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