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The one-year interest rate over the next 10 years will be: 3%, 4.5%, 6%, 7.5%, 9%, 10.5%, 14.5%, 16%, and 17.5%. a. Using the expectations

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The one-year interest rate over the next 10 years will be: 3%, 4.5%, 6%, 7.5%, 9%, 10.5%, 14.5%, 16%, and 17.5%. a. Using the expectations theory, what will be the interest rates on a three year bond, a six year bond and a nine year bond? b. A liquidity premium of 10 basis points is required for each year of bond maturity. Using the liquidity premium theory, what will be the interest rates on a three year bond, a six year bond and a nine year bond

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