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Suppose we observe the following rates: ? 1 R 1 = 0 . 9 0 % , ? 1 R 2 = 1 . 3
Suppose we observe the following rates: and
If the liquidity premium theory of the term structure of interest rates
holds, what is the liquidity premium for year Do not round intermediate
calculations. Round your answer to decimal places.
Liquidity premium
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