Which of the Following Statements Is Implied by the Existence

question 12

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.

---

Definitions:

Energy Level

Refers to the amount of energy a person has, which can affect their ability to perform activities and their overall feeling of vitality.

Daily Exercise

Regular physical activity performed on a daily basis to improve or maintain physical fitness and overall health.

Iron Intake

The consumption of iron, a vital mineral necessary for the production of hemoglobin and other functions in the body.

Lung Cancer

A type of cancer that begins in the lungs, characterized by uncontrolled cell growth in tissues of the lung, leading to a variety of respiratory and systemic symptoms.