You are given the following prices for a zero coupon bond that matures for 1 on the maturity date: Maturity Date Price 1 year 0.965 2 years 0.920 3 years 0.875 4 years 0.825 5 years 0.770 Josh and Phillip enter into a four year swap with a notional amount of 200,000. The swap has annual settlement periods. Under the swap, Josh will pay Phillip the fixed swap rate at the end of each year while Phillip will pay Josh the variable rate where the variable rate is the one year spot rate at the beginning of each year. Determine the net swap payment at the end of the first year.

a)Josh pays 2,509

b)Josh pays 3,309

c)Phillip pays 1,709

d)Phillip pays 2,509

e)Phillip pays 3,309

You are given the following prices for a zero coupon bond that matures for 1 on the maturity date: Maturity Date Price 1 year 0.965 2 years 0.920 3 years 0.875 4 years 0.825 5 years 0.770 Josh and Phillip enter into a four year swap with a notional amount of 200,000. The swap has annual settlement periods. Under the swap, Josh will pay Phillip the fixed swap rate at the end of each year while Phillip will pay Josh the variable rate where the variable rate is the one year spot rate at the beginning of each year. Determine the net swap payment at the end of the first year