When you calculate the fixed payment of a swap, you gather all the PV factors and then you subtract the last PV factor (1 - PV4) and divide that by the sum of all PV factors. when you do that, it results in the quarterly fixed rate… what is the logic there? I would think that the equation would result in the yearly fixed, but it still asks you to multiply by 4 to obtain the annualized yield. 1-PV4 is equal to the “return” by getting the difference between the FV and PV of the particular coupon… What is the logic of summing all PVs?
Maybe the article I wrote on pricing plain vanilla interest rate swaps will help: http://financialexamhelp123.com/pricing-plain-vanilla-interest-rate-swaps/.