For this question, assume that one-year and two-year bonds have ...

[JMatthes]

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

[gabrielle_lawrence]

Answer to Question 1

A

Answer to Question 2

C