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Juanita would like to invest a certain amount of money for three years and considers investing in a one-year bond that pays 3 percent. Juanita

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Juanita would like to invest a certain amount of money for three years and considers investing in a one-year bond that pays 3 percent. Juanita would then like to buy a second one-year bond that is expected to pay the one-year forward rate one year from now, and finally a third one-year bond that is expected to pay the one-year forward rate two years from now. (Hint: Assume that 2 -year bonds and 3 -year bonds both yield 7.000%. ) If the annualized interest rate on a three-year bond is 7 percent, the forward rate of a one-year security beginning two years from now is percent

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