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One-year interest rates over the next 5 years could be: 3%, 4.5%, 6%, 7.5%, and 9%. 1. Using Expectation theory, what could be the interest

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One-year interest rates over the next 5 years could be: 3%, 4.5%, 6%, 7.5%, and 9%. 1. Using Expectation theory, what could be the interest rates for a 3-year, a 4-year, and a 5-year bond? 2. Using the aforementioned data if for those years the liquidity premiums were 25% for the first three years and 50% For years 4 and beyond, what would be the interest rate on a 2-year bond, and on a 4-year bond? 1. What is the expected return of a bond with a yield of 11% and a probability of 45% and a yield of 6% and a probability of 55% 2. Based on these data, calculate the standard deviation. Show all computations, you can use the editor or upload a pdf file of your computations to manuscript

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