The existence of a ________ means that the interest rate on a two-year bond will exceed the average interest rate on two successive one-year bonds.

Name: The existence of a ________ means that the interest rate on a two-year bond will exceed the average interest rate on two successive one-year bonds.
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A risk premium compensates investors for the uncertainty and potential loss associated with holding a longer-term bond, leading to a higher interest rate compared to the average of shorter-term bonds.

The Existence of a ________ Means That the Interest Rate