Which of the Following Statements Is Implied by the Existence

question 10

Multiple Choice

Which of the following statements is implied by the existence of no-arbitrage in a risk-neutral pricing framework?

• A)All bonds will have the same expected return irrespective of maturity.
• B)Expected long-term bond rates of return will be higher than expected short-term bond rates of return.
• C)Each period,bonds of all maturities will have the same expected rate of return.
• D)The probability of rates moving up versus moving down is fifty-fifty.

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Definitions:

Androgens

Androgens are a group of steroid hormones that play a key role in male traits and reproductive activity, present in both males and females.

Testes

The male reproductive glands where sperm and male sex hormones (such as testosterone) are produced.

Cryptorchidism

A condition where one or both of the testes fail to descend from the abdomen into the scrotum before birth.

Premature

Occurring or done before the usual or expected time, often referring to actions or events that happen earlier than anticipated.