Consider these debt strategies

being considered by a corporate borrower. Each is intended to provide

$1,000,000 in financing for three years.

    Strategy #1: Borrow

$1,000,000 for three years at a fixed rate of interest of 7%.

    Strategy #2: Borrow

$1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset

annually. The current LIBOR rate is 3.50%

   Strategy #3: Borrow

$1,000,000 for one year at a fixed rate, and then renew the credit annually.

The risk of strategy #3 for the corporate

borrower is: