Treasury spot interest rates are as follows:

Maturity (years)	2	3	4
Spot rate	2.7%	3.7%	4.5%

Attempt 1/3 for 10 pts.

Part 1

You would like to lend out $20MM two years from now for one year.

1) What percentage of interest rate can you earn in that one year, compute both accurate and approximate answers?

2) Construct the necessary transactions today to lock in that (future) one-year interest revenue. Show the $ amount of interest revenue you will earn.