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Carlos would like to invest a certain amount of money for two years and considers investing in a one - year bond that pays 6

Carlos would like to invest a certain amount of money for two years and considers investing in a one-year bond that pays 6 percent and a two-year bond that pays 8 percent. Carlos is considering the following investment strategies:
Strategy A: Buy a one-year bond that pays 6 percent and in year one, then buy another one-year bond that pays the forward rate in year two.
Strategy B: Buy a two-year bond that pays 8 percent in year one and 8 percent year two.
If the one-year bond purchased in year two pays 10 percent, and the liquidity premium on a two-year bond is 0.7 percent, Carlos will choose .
Which of the following describes conditions under which Carlos would be indifferent between Strategy A and Strategy B?
The rate on the one-year bond purchased in year two is 10.033 percent.
The rate on the one-year bond purchased in year two is 8.908 percent.
The rate on the one-year bond purchased in year two is 9.377 percent.
The rate on the one-year bond purchased in year two is 9.658 percent.

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