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5. The current one-year yield on U.S treasury bonds is 6 % per year and the yield on one-year bonds is expected to be 10

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5. The current one-year yield on U.S treasury bonds is 6 % per year and the yield on one-year bonds is expected to be 10 % per year next year and 14 % per year the year after. Investors demand a 4 % liquidity premium for a two-year and 6 % for a three-year treasury bond investments. Calculate the yield for two-year and three-year treasury bonds using the liquidity premium theory 5. The current one-year yield on U.S treasury bonds is 6 % per year and the yield on one-year bonds is expected to be 10 % per year next year and 14 % per year the year after. Investors demand a 4 % liquidity premium for a two-year and 6 % for a three-year treasury bond investments. Calculate the yield for two-year and three-year treasury bonds using the liquidity premium theory

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