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Suppose that i t =5% (n=1), and that future short term interest rates for the next 4 years are not expected to change. The liquidity

Suppose that it =5% (n=1), and that future short term interest rates for the next 4 years are not expected to change. The liquidity premium ln,t for n=2, 3, and 4 is 0.25%, 0.35% and 0.5% respectively. Calculate in,t for n=2, 3, and 4. SHOW ALL WORK. Plot the yield curve.

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