What role does your forecast of future interest rates play


Assume you are going to invest $5,000 for the next year and are considering three options:

a. A money market fund that has an average maturity of 30 days and yielding 2% annually

b. A 1-year savings deposit at a bank with an interest rate of 3%

c. A 20-year U.S. Treasury bond with a yield to maturity of 5%

What role does your forecast of future interest rates play in your decision on which investment to choose?

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