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6. The table below shows the current and expected future one year interest rates, as well as current interest rates on multi-year bonds. Use the
6. The table below shows the current and expected future one year interest rates, as well as current interest rates on multi-year bonds. Use the table to calculate the liquidity premium for each multi-year bond.
Year 1-Year Bond Rate Multi-Year Bond Rate
1 2% 2%
2 3% 3%
3 4% 5%
4 6% 6%
5 7% 8%
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