How do you bootstrap when you aren’t giving Par rates? I’m thinking one uses the government rates for his bootstrapping formula…
If you’re given par rates, there’s no need to bootstrap; the n-year par rate is the fixed rate for an n-year swap.
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Got it. For the 3rd period spot rate I get 5.33%. N=3 , PV= -90 , PMT= 0 , FV= 105.25
Which inputs are wrong?
You can’t really use the TVM worksheet here: TVM assumes the discount rate is the same for all years.
What you’re trying to do is find the SFR such that if I discount each year’s CF by the matching spot rate then the total PV is 1 (or par). This is what the first line in the solution is doing. LHS is the PV of the coupons of SFR for years 1 and 2 and (SFR + face of 1) at time 3, which is then set equal to 1. More of that good ol’ fashioned aljibber gets you to 5.92%
The prices in the spot rate chart are in effect PV factors: the spot rates themselves are 4%/5%/6%/7% for years 1/2/3/4. 
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Crisp explanation.
Are the given Government rates considered Par rates?
I would imagine so. Most government bonds pay coupons, so a spot curve would be distinctly weird.
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