Question
The one-year interest rates over the next 3 years are expected to be 4%, 5% and 6%. The liquidity premium for three-year bonds is 1%.
The one-year interest rates over the next 3 years are expected to be 4%, 5% and 6%. The liquidity premium for three-year bonds is 1%. What is the interest rate on a three-year bond, according to the liquidity premium theory?
A) 6% B) 10% C) 11% D) 5%
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Manage Finances And Develop Financial Plans Running Your Business Better
Authors: Ian Birt
6th Edition
1925716368, 978-1925716368
