Ginny would like to invest a certain amount of money for two years and considers investing in a one$-$year bond that pays $5$ percent and a two$-$year

bond that pays $7$ percent. Ginny is considering the following investment strategies:

Strategy A: Buy a one$-$year bond that pays $5$ 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 $7$ percent in year one and $7$ percent year two.

If the one$-$year bond purchased in year two pays $11$ percent, and the liquidity premium on a two$-$year bond is $0\mathrm{.}7$ percent, Ginny will choose

Which of the following describes conditions under which Ginny would be indifferent between Strategy A and Strategy B$?$

The rate on the one$-$year bond purchased in year two is $7\mathrm{.}952$ percent.

The rate on the one$-$year bond purchased in year two is $8\mathrm{.}371$ percent.

The rate on the one$-$year bond purchased in year two is $8\mathrm{.}622$ percent.

The rate on the one$-$year bond purchased in year two is $8\mathrm{.}957$ percent.