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Amy would like to invest a certain amount of money for three years and considers investing in ( 1 ) a one-year bond that pays

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Amy would like to invest a certain amount of money for three years and considers investing in ( 1 ) a one-year bond that pays 3 percent, foliowed by a bwo-year bond that pays the forward rate, or (2) a three-year bond that pays 9 percent in each of the next three years, Amy is considering the following Investment strategles: Strategy At buy a one-year bond that pays 3 percent in vear one, then buy a two-year bond that pays the two-year forward rate in years two and three. Strategy bt-Buy a three-year bond that pays 9 percent in each of the next three years. If the two-year bond purctased one vear from now pays 5 percent annually, Amy will choose Which of the following describes conditions under which Amy would be indifferent between Strategy A and Strategr a? The rete on the twoyear bond purchased one vear from now la 13.460 percent: The rater on the two-year bund purchased one year from now is 12.130 percent. The rute on the twowver bond purchases one vear from now is 13,222 percens

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