The one-year spot rate is currently 2%; the expected one-year spot rate one year from now is 3%; and the expected one-year spot rate two years from now is 4%. According to Pure Prospect Theory:

Required:

what should today's three-year spot rate be?

 Assuming the three-year spot rate is actually 4%, how can you take advantage of that? To explain. Assume that all rates are the effective annual rate.