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Suppose the 2-year spot rate 5% and the 4-year spot rate 7%. The annual liquidity premium is 1%. According the expectation theory, what is the
Suppose the 2-year spot rate 5% and the 4-year spot rate 7%. The annual liquidity premium is 1%. According the expectation theory, what is the expected 2-year spot rate, 2 years from now?
8.04% | ||
10.04% | ||
9.04% | ||
7.04% | ||
11.04% |
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