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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 (1) a one-year bond that pays 4 percent, followed by a two-year bond that pays the forward rate, or (2) a three-year bond that pays 9 percent in each of the next three years. Brian is considering the following investment strategies:
Strategy A: Buy a one-year bond that pays 4 percent in year one, then buy a two-year bond that pays the two-year forward rate in years two and three.
Strategy B: Buy a three-year bond that pays 9 percent in each of the next three years.
If the two-year bond purchased one year from now pays 7 percent annually, Brian will choose

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