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?
