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Question 18 1 pts Yield Curve am 5.50% ' 5.1115 : 1m - I. ' 150i- anmt. ~ Consider the previous question with the same
Question 18 1 pts Yield Curve am 5.50% ' 5.1115 : 1m - I.\" ' 150i- anmt. ~ Consider the previous question with the same yield curve. Now suppose I tell you that market participants are risk averse. They require a liquidity premium of 0.50% to hold the 2-year bond. a liquidity premium of 1.00% to hold the Swear bond. and a liquidity premium of 1.50% to hold the 4-year bond. Then, according to the liquidity preference theory. the market's expectation of the one-year interest rate on July 15'. 2023 is! percent. Moreover. the market's expectation of the three-year interest rate on July 1\". 2023 is percent
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