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.
Question 2
The FDIC currently insures each bank account up to what level?
A) 10,000
B) 50,000
C) 250,000
D) 150,000
