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Suppose the 2-year spot rate 4% and the 4-year spot rate 8%. The annual liquidity premium is 1%. According the expectation theory, what is the
Suppose the 2-year spot rate 4% and the 4-year spot rate 8%. The annual liquidity premium is 1%. According the expectation theory, what is the expected 2-year spot rate, 2 years from now?
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