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18. The 1-year interest rates from years one to six years are 3%, 4%, 4%, 5%, 6%, 6% respectively. In addition, the following liquidity premiums
18. The 1-year interest rates from years one to six years are 3%, 4%, 4%, 5%, 6%, 6% respectively. In addition, the following liquidity premiums from years one to six are expected to be 0%; 0.25%, 0.5%, 0.75%, 1%, and 1.25% respectively Assuming that the expectations theory is the correct one of the term structures, the yield to maturity of a 3 years bond is: * O a) 3.67% Ob) 4% c) 4.67% d) 4.75% O e) None of the above
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