Suppose I have 2 strategies; A) Buying A One Year Bond And Holding To Maturity (Buy & Hold To Maturity)
B) Buying A 3 Year Bond and Selling After One Year (Rolling Down The Yield Curve)
Assume that the 1 year treasury yield to be 0.24%, the two year 0.55%, and 3 year to be .80%. The cost of funding is assumed to be zero.
During the next one year, interest rates do not move at all.
Which strategy will be more profitable? Some bond mathematics, if possible, would be useful.
I understand strategy B will be more profitable if interest rates go down later. I am wondering what happens if interest rates remain static.