Risk and Return

Have $5,000 to invest for the next year and are considering three alternatives: A money market fund with an average maturity of 30 days offering a current yield of 6% per year. A 1-year savings deposit at a bank offering an interest rate of 7.5%. A 20-year U.S. Treasury bond offering a yield to maturity of 9% per year. What role does forecast of future interest rates play?

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