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Brian would like to invest a certain amount of money for three years and considers investing in ( 1 ) a one - year bond
Brian would like to invest a certain amount of money for three years and considers investing in a oneyear bond that pays percent, followed by a twoyear bond that pays the forward rate, or a threeyear bond that pays percent in each of the next three years. Brian is considering the following investment strategies:
Strategy A: Buy a oneyear bond that pays percent in year one, then buy a twoyear bond that pays the twoyear forward rate in years two and three.
Strategy B: Buy a threeyear bond that pays percent in each of the next three years.
If the twoyear bond purchased one year from now pays percent annually, Brian will choose
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