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Forward Rate - Assume that, as of today, the annualized two-year interest rate is 13 percent, and the one-year interest rate is 12 percent. Use

Forward Rate - Assume that, as of today, the annualized two-year interest rate is 13 percent, and the one-year interest rate is 12 percent. Use this information to estimate the one-year forward rate. Assume that liquidity premium on a two-year security is 0.3 percent. Use this information to estimate the one-year forward rate.

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