Refer to Problem H.6. After one year, the new spot rates are shown in the table below.

Years	1	2	3
Spot Rate	4.0%	5.0%	6.0%

Find the actual net payment to be made by the investor two years after entering into the interest rate swap.

(a) 365 (b) 385 (c) 405 (d) 425 (e) 445

(Reference to problem H.6)

The current term structure of interest rates is shown in the table below.

Years	1	2	3	4
Spot Rate	3.0%	3.5%	4.0%	4.5%

An investor who enters into a 4-year interest rate swap agrees to pay a fixed interest rate R in exchange for receiving a variable interest rate. The notional amount is $100,000 and the swap has annual net payments. Find R.

(a) 3.54% (b) 3.75% (c) 4.00% (d) 4.24% (e) 4.44%

Answer to problem H.6 --> (E) 4.44%