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2. The spot rate for a 1yr Zero Coupon Bond is 3.8%. The market does not expect yields to change over the next year. The

2. The spot rate for a 1yr Zero Coupon Bond is 3.8%. The market does not expect yields to change over the next year. The price for a 2yr ZCB is $920. Calculate the liquidity risk premium. (Two acceptable answers) 3. Consider the question above. What is the liquidity risk premium if we expect the 1yr spot rate to increase to 4.1% by the end of the year? (Two acceptable answers)
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2. The spot rate for a 1yr Zero Coupon Bond is 3.8%. The market does not expect yields to change over the next year. The price for a 2yr ZCB is $920. Calculate the liquidity risk premium. (Two acceptable answers) 3. Consider the question above. What is the liquidity risk premium if we expect the 1yr spot rate to increase to 4.1% by the end of the year? (Two acceptable answers)

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