The following is a list of prices for zero-coupon bonds with different maturities and par value...
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The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Term to Maturity (Year) 1 2 3 4 Price $920 $860 $790 $710 Given the liquidity risk premium is 3%, what is the expected future spot rate in the second year according to the liquidity preference hypothesis? O a. 9.98% O b. 3.98% O c. 9.37% O d. 6.98% The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Term to Maturity (Year) 1 2 3 4 Price $920 $860 $790 $710 Given the liquidity risk premium is 3%, what is the expected future spot rate in the second year according to the liquidity preference hypothesis? O a. 9.98% O b. 3.98% O c. 9.37% O d. 6.98%
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