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Need help with this finance hw. Please show work in Excel. The current one-year spot rate is 4%, and the two-year spot rate is 6%.
Need help with this finance hw. Please show work in Excel.
The current one-year spot rate is 4%, and the two-year spot rate is 6%. Investors demand a liquidity premium on long-term bonds such that their expected return on a two-year bond is 0.25% per year higher than their expected return on a series of two, one-year bonds. The expected spot rate on a one-year bond next year is approximately
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