Suppose the oil forward prices for 1 year, 2 years, and 3 years are $ 21 / barrel, $ 22 /barrel, and $ 23 /barrel. The 1- year effective annual interest rate is 8 %, the 2- year interest rate is 8.5 %, and the 3- year interest rate is 9 %.

a) Determine the 3-year swap price $?



b) What is the price of a 2 - year swap beginning in one year $?