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A recent edition of The Wall Street Journal reported interest (spot) rates of 1.84 percent, 1.69 percent, 1.63 percent, and 1.65 percent for one-year, two-year,

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A recent edition of The Wall Street Journal reported interest (spot) rates of 1.84 percent, 1.69 percent, 1.63 percent, and 1.65 percent for one-year, two-year, three-year, and four-year Treasury notes, respectively. According to the Liquidity Premium Theory, calculate the expected one-year rates for years 2, 3, and 4 (i.e., what are E(21), E(3r), and E(ar)). respectively? Assume that LN 2*(N-1)*0.02%, where N denotes that term to maturity of the bond. 3 N=

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