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The following spot rates are observed today. Maturity Spot rate (%) 1 year 0.75 2 year 1.50 3 year 2.30 4 year 2.75 5 year

The following spot rates are observed today.

Maturity Spot rate (%)
1 year 0.75
2 year 1.50
3 year 2.30
4 year 2.75
5 year 3.25

If an investor with a five-year investment horizon expects that two-year rates will be 5% at the end of three years, what should the investor do?

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