Suppose todays zero rates are as shown in the table below.

To lock in lending rate between year 3 and 4, your action today will be to _______ for ________ years, and ______ the same amount for ______ years.

a. Lend; 3 ; Borrow; 4

b. Borrow; 2; Lend; 3

c. Lend; 4 ; Borrow; 2

d. Borrow; 3; Lend; 5

e. None of the above

Year 1 2 3 4 5 Zero rate for an n-year investment (% per annum) 3.0 4.0 4.6 5.0 5.3