You wish to calculate the level fixed cost of three-year funds using Eurodollar deposit and FRA quotes, and you gather the following information:

2-Year Eurodollar Deposit Rate: 2.50% p.a.

12 x 24 month FRA quote: 2.70% p.a.

24 x 36 month FRA qoute: 3.20% p.a.

(i) Using these quotes and assuming 365/360 interest accruals, calculate the spot rate applicable for the entire three-year period.

(ii) What is the compound semi-annual rate (expressed as an annual percentage) implied by the spot rate you calculated in part (i) above.