The document shows a table with the current 1-year interest rate (i_1^0) of 1.04 and the expected 1-year rate next year (i_1^1) of 1.01. Using expectations theory, the interest rate on a 2-year bond today (i_2^0) can be calculated as 1.0192 by setting the expected future value of a 2-year bond equal to its present value and solving for i_2^0. The risk is greater on long-term bonds than short-term bonds is stated as true.