Suppose that the six-month spot rate is 600 and one-year, Ask an Expert

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Suppose that the six-month spot rate is 6.00% and one-year spot rate is 6.10%. Additionally, suppose that you can look into a crystal ball and know for sure that six months from now that the six-month forward rate will be 6.2%. What would be your investment strategy? A) Would you invest in the one year security? B) Would you invest in six month security and reinvest in the next six month security? C) Would you be indifferent about doing A) or B)

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Financial Management, Finance

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