For the following problem consider these debt strategies being considered by a corporate borrower. Each is intended to provide $1,000,000 in financing for a three-year period. Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%. Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset annually. The current LIBOR rate is 3.50% Strategy #3: Borrow $1,000,000 for one year at a fixed rate, and then renew the credit annually. The current one-year rate is 5%. Choosing strategy #3 will:

a		guarantee the lowest average annual rate over the next three years.
b		eliminate credit risk but retain repricing risk.
c		maintain the possibility of lower interest costs, but maximizes the combined credit and repricing risks.
d		preclude the possibility of sharing in lower interest rates over the three-year period.