Emilia is indifferent between the following two investments

1.invest in a one-year zero coupon bond that is priced to yield 4% and

2. invest in a two-year zero-coupon bond that is priced to yield 4.5%.

1. If the one-year forward rate one year from now is 5.2%, Emilia should prefer investment __________ (1 or 2) and show the calculations