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Beth would like to invest a certain amount of money for two years and considers investing in a one - year bond that pays 3
Beth would like to invest a certain amount of money for two years and considers investing in a oneyear bond that pays percent and a twoyear bond that pays percent. Beth is considering the following investment strategies:
Strategy A: In the first year, buy a oneyear bond that pays percent. Once that bond matures, buy another oneyear bond that pays the forward rate.
Strategy B: In the first year, buy a twoyear bond that pays percent annually.
If the oneyear bond purchased in year two pays percent, Beth will choose
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