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When constructing a yield curve, what is the role of zero-coupon bonds? What is a yield curve? What is the difference between a spot rate,
When constructing a yield curve, what is the role of zero-coupon bonds? What is a yield curve? What is the difference between a spot rate, a short rate, and a forward rate? How is a one-year forward rate five years out easily calculated? What does the expectations hypothesis suggest? What does the liquidity preference suggest? Importantly, how does the expectations and liquidity preference theories complicate the interpretation of the message of the yield curve?
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