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(1) Assume today5-year rate is 6% and todays 3-year rate is 4.5%, Based on unbiased expectation theory, what is the expected 2-year rate at the

(1) Assume today5-year rate is 6% and todays 3-year rate is 4.5%, Based on unbiased expectation theory, what is the expected 2-year rate at the end of Year 3? (2) According to the Liquidity Preference Theory, what is the risk premium for the future 2-year investment?

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