4\ Problem 2-15 (LG 2-7)\ Suppose we observe the following rates:

_(1)R_(1)=10%,_(1)R_(2)=14%

, and

E(_(2)r_(1))=18%

. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2 ? (Round your intermediate calculations to 5 decimal places and final answer to 3 decimal places. (e.g., 32.161))\

%

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00:48.11

Suppose we observe the following rates: 1R1=10%,1R2=14%, and E(2r1)=18%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2 ? (Round your intermediate calculations to 5 decimal places and final answer to 3 decimal places. (e.g., 32.161))