Question
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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Mathematical Interest Theory
Authors: Leslie Jane, James Daniel, Federer Vaaler
3rd Edition
147046568X, 978-1470465681
