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6. The spot rates for years 1,2 and 3 , are 5%,6% and 7% annual respectively. There is an annual liquidity premium of 1% and
6. The spot rates for years 1,2 and 3 , are 5%,6% and 7% annual respectively. There is an annual liquidity premium of 1% and an annual inflation premium of 0.5% annual. What is the expected spot rate for the one-year period that starts in two years and ends in three years? (choose the right range) a. 6.5% to 7% b. 7.5% to 8% c. 1% to 1.5% d. None of the options is correct
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