Assuming no risk and no term premium, the two-year bond rate is equal to:
A) The average of one-year bond rates over the two years
B) The highest of the one-year bond rates over the two years
C) The lowest of the one-year bond ratea over the two years
D) One third of the one-year rate in year one plus two-thirds of the one-year rate in year two
Correct Answer:
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