Rose Resources Ltd wishes to invest today in order to reach a defined target of $80 million in five years' time. Cheng, the chief investment officer of Rose Resources, is considering three possible investment strategies. These are:

1. Buy a zero-coupon bond with a maturity of five years.
2. Buy a fixed-coupon bond with a maturity of five years.
3. Buy a fixed-coupon bond with a duration of five years.

At present, the term structure is flat. Cheng's objective is to minimise the likelihood of missing the target. Cheng has asked you which of these strategies you believe is likely to be the most effective and which is likely to be the least effective.

Assuming all bonds are correctly priced and each of the strategies can be implemented, your advice to Cheng is:

A) Strategy 1 is best because is "set and forget" and is certain to achieve the target

B) Strategy 3 is best because is "set and forget"

C) Strategy 2 is best because has a maturity that matches the maturity of the liability

D) Strategy 3 is best because is certain to achieve the target also for large changes in interest rates

E) Strategy 2 and 3 are equivalent