Consider the interest rates on securities with various terms to maturity, shown in Table 12.5.18. a. Find
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a. Find the regression equation to predict the longterm interest rate (Treasury bonds) from the two shorter-term rates.
b. Create a new variable, interaction, by multiplying the two shorter-term rates together. Find the regression equation to predict the long-term interest rate (Treasury bonds) from both of the shorter-term rates and the interaction.
c. Test whether there is any interaction between the two shorter-term interest rates that would enter into the relationship between short-term and long-term interest rates.
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