Question: Please explain it step-by-step 2) You have the following information today. A bond that matures in one year has a 7% interest rate, a bond

Please explain it step-by-step

Please explain it step-by-step 2) You have the following information today. A

2) You have the following information today. A bond that matures in one year has a 7% interest rate, a bond that matures in two years has an interest rate of 4%. At this time next year (one year into the future) you believe that you could buy a bond with one year to maturity with a 1.5% interest rate. You have a two year time horizon with your funds. You have to decide today to either buy a two year bond today or a series of one year bonds. Given this information what strategy should you pursue. Justify your answer with calculations

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