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Assume that the yield on a 1-year security is 6 percent, and that the yield on a 2-year security is 7 percent. If the liquidity
Assume that the yield on a 1-year security is 6 percent, and that the yield on a 2-year security is 7 percent. If the liquidity premium contained in the 1-year forward rate is 0.4 percent, the the expected future 1-year rate is (according to the liquidity preference hypothesis)
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