A company requires a loan for a period of three years. A bank offers interest rates of $7\mathrm{.}60\%,7\mathrm{.}85\%,8\mathrm{.}05\%$ and $8\mathrm{.}20\%$ on term loans for periods of one, two, three and four years respectively. How can we explain that the company chose the interest rate for a two$-$year period rather than a three$-$year period?

A$.$ The company expects interest rates to fall below $8\mathrm{.}05\%$ over the next year. It considers unecessary to pay a fee to obtain a forward$-$forward contract.

B$.$ The company expects interest rates to be above $8\mathrm{.}10\%$ next year and has secured a forward$-$forward contract offering an interest rate of $8\mathrm{.}25\%$ for the third year.

C$.$ The company expects interest rates to fall and is confident of getting at the beginning of year $3$ a forward rate of $8\mathrm{.}05\%.$

D$.$ The company expects interest rates not to fall below the average of $7\mathrm{.}925\%$ and it wants to hedge against repricing risk.