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If we observe that the yield on both the 1-year and the 2-year Treasuries are 2% and there is a positive liquidity premium, then, according

If we observe that the yield on both the 1-year and the 2-year Treasuries are 2% and there is a positive liquidity premium, then, according to the liquidity premium theory market participants expect that the 1-year interest rate next year will be:

Question 2 options: 2%

higher than 2% l

ower then 2%

we can't tell

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