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The expected yield on 1 year bonds over the next 5 years is 0.2%, 0.3%, 0.5%, 0.7%, and 1.2%. The current liquidity premium is 0.4%
The expected yield on 1 year bonds over the next 5 years is 0.2%, 0.3%, 0.5%, 0.7%, and 1.2%. The current liquidity premium is 0.4%
#1 Using the Expectations Theory of term structure, calculate the yield on a 5 year bond today. (round to 2 decimal points)
#2 Using the Liquidity Premium Theory, calculate the yield on a 5 year bond today.(round to 2 decimal points)
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