If i 2 (2020) denotes the annual interest rate on 2-year bonds issued in 2020 an

Question

If i2(2020) denotes the annual interest rate on 2-year bonds issued in 2020 and i1(2020) and i2(2021) represent interest rates on 1-year bonds purchased in 2020 and 2021, the equilibrium relationship between the 2-year bond and the two 1-year bonds is:

i2(2020) = i1(2020) + i1(2021). i2(2020) = (1/2)[i1(2020) + i1(2021)]. i2(2020) = (1/2)[i1(2020) If i2(2020) denotes the annual interest rate on 2-year bonds issued in 2020 and i1(2020) and i2(2021) represent interest rates on 1-year bonds purchased in 2020 and 2021, the equilibrium relationship between the 2-year bond and the two 1-year bonds is:

If i2(2020) denotes the annual interest rate on 2-year bonds issued in 2020 and i1(2020) and i2(2021) represent interest rates on 1-year bonds purchased in 2020 and 2021, the equilibrium relationship between the 2-year bond and the two 1-year bonds is:

If i2(2020) denotes the annual interest rate on 2-year bonds issued in 2020 and i1(2020) and i2(2021) represent interest rates on 1-year bonds purchased in 2020 and 2021, the equilibrium relationship between the 2-year bond and the two 1-year bonds is:

i2(2020) = i1(2020) + i1(2021). i2(2020) = (1/2)[i1(2020) + i1(2021)]. i2(2020) = (1/2)[i1(2020) i2(2020) = i1(2020) + i1(2021). i2(2020) = (1/2)[i1(2020) + i1(2021)]. i2(2020) = (1/2)[i1(2020)

Explanation / Answer

b)i2(2020) = (1/2)[i1(2020) + i1(2021)].

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