At time t the one-year interest rate is 5%, the two-year rate is 5.75%, and the liquidity premium is 0.25%. Using the liquidity premium theory,
At time t the one-year interest rate is 5%, the two-year rate is 5.75%, and the liquidity premium is 0.25%. Using the liquidity premium theory, solve for the forward rate one year from now.
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Authors: Judith J. Baker, R.W. Baker, Neil R. Dworkin
5th Edition
1284118215, 978-1284118216
