Question
Assume that a one-year bond currently pays 5% interest. It's expected that it will pay 4.5% next year and 4% the following year. The two-year
Assume that a one-year bond currently pays 5% interest. It's expected that it will pay 4.5% next year and 4% the following year. The two-year term premium is 0.2% while the three-year term premium is 0.35%. What is the interest rate on a 3 year bond according to the liquidity premium theory?
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Investments An Introduction
Authors: Herbert B. Mayo
13th Edition
0357127951, 978-0357127957
