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(MEH) Use the modified expectations hypothesis (MEH) to find a one-year interest rate expected three years from now (r3,4) if the following rates are known
(MEH) Use the modified expectations hypothesis (MEH) to find a one-year interest rate expected three years from now (r3,4) if the following rates are known or have been estimated: R1 = 5.05%, R4 = 6.32%, r1,2 = 5.59%, and r2,3 = 7.11%. The liquidity premium for the four-year maturity (L4) is 0.24%. Record the answer in % to the nearest 0.01%, drop the % symbol. E.g., if your answer is 6.245%, record it as 6.25. Blank 1. Calculate the answer by read surrounding text.
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