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Short term (one year) interest years over the next 5 years will be 1.1, 2, 1.8, 1.1, and 1.2. Assume that the investors prefer holding

Short term (one year) interest years over the next 5 years will be 1.1, 2, 1.8, 1.1, and 1.2. Assume that the investors prefer holding short-term bonds so that liquidity premium of 10 basis points is required for each year of bond maturity. Using the liquidity premium theory, what will be the interest rates on 3-year bonds?

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