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Munze Munze
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6 years ago
For this question, assume that one-year and two-year bonds have the same risk; therefore, you can ignore risk here. Assuming that there is arbitrage between one-year bonds and two-year bonds, we know that the expected rate of return on two-year bonds
A) will equal the expected rate of return from holding a one-year bond for one year.
B) will equal the expected rate of return from holding a one-year bond for two years.
C) will be larger than the expected rate of return from holding a one-year bond for one year.
D) will be smaller than the expected rate of return from holding a one-year bond for one year.
E) will be exactly half the rate of return on one-year bonds.
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Macroeconomics

Macroeconomics


Edition: 6th
Authors:
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Macroeconomics, 6/E (Blanchard, Johnson)
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vonCOLLINZOvonCOLLINZO
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Munze Author
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5 years ago
Thanks so much Slight Smile I'll post more questions
Macroeconomics, 6/E (Blanchard, Johnson)
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