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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 = 5.17%, R4 = 6.09%, r1,2 = 5.66%, and r2,3 = 7.34%. The liquidity premium for the four-year maturity (L4) is 0.27%. 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. ___________________
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