The date today is July 31st, 2019. Mary has $5000 and wants to invest for 3...

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Finance

The date today is July 31st, 2019. Mary has $5000 and wants toinvest for 3 years.
Option 1: Invest in a four-year security maturing on July 1st,2023 has an interest rate of 8% per year
Option 2: Invest in a three year security maturing on July 31,2022 has an interest rate of 6%, then on July 31, 2022, investanother two-year security maturing on July 31, 2023.

Based on the unbiased expectations theory, what should be thereturn of the one-year security beginning July 31, 2022 (at the endof the three year security) and maturing on July 2023 (at the startof the two-year security)?

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The date today is July 31st, 2019. Mary has $5000 and wants toinvest for 3 years.Option 1: Invest in a four-year security maturing on July 1st,2023 has an interest rate of 8% per yearOption 2: Invest in a three year security maturing on July 31,2022 has an interest rate of 6%, then on July 31, 2022, investanother two-year security maturing on July 31, 2023.Based on the unbiased expectations theory, what should be thereturn of the one-year security beginning July 31, 2022 (at the endof the three year security) and maturing on July 2023 (at the startof the two-year security)?