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3.Answer the following questions regarding theories of term structure a. What is the assumption of Expectations Hypothesis Theory?(5%) b.Explain why the Liquidity Premium Theory leads

3.Answer the following questions regarding theories of term structure a. What is the assumption of Expectations Hypothesis Theory?(5%) b.Explain why the Liquidity Premium Theory leads to a prediction of an upward bias in the yield curve even if the rates are expected to be a constant.(10%) c.Address a comparative analysis between the two theories.(10%)

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