need help with #1. i wrote examples on the top of the page.

a year bond - (It ist) (1 + ist) - 1 - 21st Section I (ONLY ONE @ 7 marks) 2 1-yearboods - (tit) (Itin-1 it teen tiilieti) 1. Demonstrate algebraically that a 3-year interest rate is the average of three 1-year interest - itt itt rate. Under what condition does this result hold? Does that mean if I get a 3-year RBC bond it is equivalent to 3 1-year CIBC or TD bond? 2. Demonstrate algebraically under the augmented expectations hypothesis of the term structure that the bond yield of an n-year bond contains both a risk free component and a risk premium. What happens to the bond yield as the risk premium increases and the time horizon shortens? ection II (ONLY ONE @ 7 marks) 1. Use appropriate graph to explain the effect on the bond market of an anticipated increase to A rcent