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Suppose we observe the following rates: 1r1= 0.10 , 1r2= 0.14 E(2R1)= 0.10. If the liquidity premium theory of the term structure of interest rates

Suppose we observe the following rates: 1r1= 0.10 , 1r2= 0.14 E(2R1)= 0.10. If the liquidity premium theory of the term structure of interest rates holds. What is the liquidity premium for year.

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