How can one invest today at the 2-year forward rate of interest?

I) By buying a 2-year bond and selling a 1-year bond with the same coupon
II) By buying a 1-year bond and selling a 2-year bond with the same coupon
III) By buying a 1-year bond and then after a year reinvesting in a further 1-year bond

a. I only

b. II only

c. III only

d. II and III only

1 answer

D