medium · FRM Part 1 Financial Markets and Products
In a 2-year annual-pay swap, the first-year forward rate is 3% and the second-year forward rate is 5%. Assuming a flat discount curve of 4% for simplicity in weights, the swap rate will be closest to:
- 5.0%
- 3.0%
- 8.0%
- 4.0%
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