Suppose that the one-year rate is 7% and the two-year rate is 6%. The strategy that produces the highest expected rate of return over a two year period, according to the liquidity preference hypothesis, is to

• A. buy the one-year security and roll over into another one-year security

• B. buy the two-year security

• C. both strategies produce the same expected rate of return

• D. the answer depends on the future direction of interest rates