If I were to calculate the risk neural probability for a given bond and I had two different return rates, so r=A(1)/A(0)-1 doesn't equal A(2)/A(1)-1, would I take the average of the return rates or calculate two different risk neutral probabilities?

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- Feb 21st 2009, 08:42 AMLuck of the IrishRisk Neutral Probability
If I were to calculate the risk neural probability for a given bond and I had two different return rates, so r=A(1)/A(0)-1 doesn't equal A(2)/A(1)-1, would I take the average of the return rates or calculate two different risk neutral probabilities?

- Mar 3rd 2009, 07:19 PMTKHunny
What does "average of the return rates" even mean?