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1.One-year interest rate over the next five years: 5%, 6%, 7%, 8%, and 9% 2. Investors' preferences for holding short-term bonds so liquidity premium for
1.One-year interest rate over the next five years: 5%, 6%, 7%, 8%, and 9% 2. Investors' preferences for holding short-term bonds so liquidity premium for one-to five-year bonds: 0%, 0.25%, 0.5%, 0.85%, and 1.0% Based on Liquidity premium theory, what is the interest rate on a 4 year bond? A. 5% B. 7.35% C. 5.75% D. 6.5%
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