plain vanilla interest rate swap

1. Explain why a plain vanilla interest rate swap and the compounding swap in Section 32.2 can be valued using the ‘‘assume forward rates are realized’’ rule, but a LIBOR-inarrears swap in Section 32.4 cannot.
2. In the accrual swap discussed in the text, the fixed side accrues only when the floating reference rate lies below a certain level. Discuss how the analysis can be extended to cope with a situation where the fixed side accrues only when the floating reference rate is above one level and below another.