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Suppose we observe the following rates: one-year interest rate is 4.7%, two-year interest rate is 5.5%, and expected one-year interest rate one year from now
Suppose we observe the following rates: one-year interest rate is 4.7%, two-year interest rate is 5.5%, and expected one-year interest rate one year from now is 4.75%. If the liquidity premium theory of the term structure of interest rates holds, the liquidity premium for year 2 should be _____% (Do not include percentage sign. Round your intermediate calculations to 5 decimal places and final answer to 2 decimal places. (e.g., 32.16))
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