Assume that the following relationship holds in the bond market:

(1+R(0,3))=(1+R(0,1)+L)(1+E[R(1,2)]+L)(1+E[R(2,3)]+L)

If investors are risk neutral, can you think of a way that could make this relationship valid?

All the risk premiums L should be positive

All the risk premiums L should bezero

Investors are indifferent to risk so premiums L can take any value.

Investors are indifferent to risk soit is not possible for this relationship to hold under any circumstance.