Assume that, as of today, the annualized interest rate on a three-year security is10 percent and the annualized interest rate on a two year security is 7 percent. Use this information to estimate the one-year forward rate two years from now.

a.

2.41%

b.

1.52%

c.

None of the above.

d.

4.56%

e.

3.39%