Question: Look again at the spot interest rates shown in question 8. What can you deduce about the one-year spot interest rate in four years if

Look again at the spot interest rates shown in question 8. What can you deduce about the one-year spot interest rate in four years if

(a) The expectations theory of term structure is right?

(b) The liquidity-preference theory of term structure is right?

(c) The term structure contains an inflation uncertainty premium?

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