C. Alvie esifinatio\ \ Assume you want to invest your savings of

$1,000

in government securities for the next 2 years.\ Currently you can invest either in a security that pays interest of

6%

per year for the next 2 years or in a security that matures in 1 year buy pays only\ If you make the latter choice, you would need to reinvest your savings at end of the first year for another year.\ Calculate the rate that you would need to eam on the one-year security next year to be indifferent between these two investment opportunities.\ Enter answer in numbers, i.e.

1.0%

is

1.0,0.9

is

.9%

n

Assume you want to invest your savings of $1,000 in government securities for the next 2 years. Currently you can invest either in a security that pays interest of 6% per year for the next 2 years or in a security that matures in 1 year buy pays only If you make the latter choice, you would need to reinvest your savings at end of the first year for another year. Calculate the rate that you would need to earn on the one-year security next year to be indifferent between these two investment opportunities. Enter answer in numbers, i.e. 1.0% is 1.0,0.9 is .9%