Question
Assume that as of today, the annualized two-year interest is 5.5%, the one-year interest rate is 3.2% and the liquidity premium of a two-year security
Assume that as of today, the annualized two-year interest is 5.5%, the one-year interest rate is 3.2% and the liquidity premium of a two-year security is 0.25%. Based on the Liquidity premium theory, what is the estimate of the one-year forward rate one-year from now?
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Contemporary Financial Management
Authors: Don Cyr, Alfred Kahl, William Rentz, R. Moyer
1st Edition
017616992X, 978-0176169923
