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An investor feels that the future spot rate for year 2 will be 7%. Presently, he can invest for one year at 6% or two

An investor feels that the future spot rate for year 2 will be 7%. Presently, he can invest for one year at 6% or two years at 7%. His liquidity premium for year two is: (a) 0.51%. (b) 2.01%. (c) 1.0%. (d) 0

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