Question 2. (2.25 points) The local school district borrow money for a project on a three-year, variable rate loan. They enter into an interest rate swap with a third party so that the school district will pay a fixed rate while the third part pays a variable rate, say prime plus 2%. Today's spot rate on a one-year investment is 5%, that on a two-year investment is 6%, and that on a three-year investment is 7%. The notional principal amount in the first year is $6,000,000. In the second year it is $3.000.000. In the third year it is $1,000,000. What is the swap rate paid by the school district? Question 2. (2.25 points) The local school district borrow money for a project on a three-year, variable rate loan. They enter into an interest rate swap with a third party so that the school district will pay a fixed rate while the third part pays a variable rate, say prime plus 2%. Today's spot rate on a one-year investment is 5%, that on a two-year investment is 6%, and that on a three-year investment is 7%. The notional principal amount in the first year is $6,000,000. In the second year it is $3.000.000. In the third year it is $1,000,000. What is the swap rate paid by the school district