On one of your numerous displays you find discount factors as given in the following table

On one of your numerous displays you find discount factors as given in the following table. A client is ringing you and wishes to enter into a fixed—for—floating swap with both legs paying every 3 months. This swap would expire in 18 months. is the approximate annual 4-compounded swap rate for this IRS with tenor 3 months? Since you are not given the 3 month rates, you immediately interpolate the 3 month discount factors from the 6 months discount factors. Your clients expects a quote of the rate in percent with 3 decimals. Which of the proposed values are you quoting them? Time horizon 6 months 12 months 18 months Z(0,T) 0.9797 0.9579 0.9368