UNDER EXPECTATION THEORY OF INTEREST RATES. If this year a 1-year bond has a return of 5%, and people believe next year a one-year bond will have return of 4%, and the year after people believe a 1- year bond will have a return of 3%. What should interest rates on a 3-year bond be today?

If the 3-year bond rate is 7% what is the liquidity premium? __________

UNDER EXPECTATION THEORY OF INTEREST RATES. If this year a 1-year bond has a return of 5% and a 2-year bond has a return of 3%. What do people expect interest rates on one-year bonds to be next year.