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suoppose that your preferred habitat is in short-term bonds with a liquidity premium on 2-year bonds of 0.25% if the interest rate for this year

suoppose that your preferred habitat is in short-term bonds with a liquidity premium on 2-year bonds of 0.25% if the interest rate for this year on a 1-year bond is 5% and expect interest rate on a 1-year bond starting 1 year from now is 7.00% what is the yield rate on a two-year bond according to the preferred habitat theory?

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