Question
5a. Assume that the one-year interest rate is 1%, the two-year interest rate is 2% and the three-year interest rate is 2%. What is the
5a. Assume that the one-year interest rate is 1%, the two-year interest rate is 2% and the three-year interest rate is 2%. What is the expected one-year interest rate a year from now, and two years from, according to the expectations theory?
b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the three-year interest rate is 2%, the liquidity premium for two-year interest rates is 0.3%. and the liquidity premium for three-year interest rates is 0.4%. What is the expected one-year interest rate a year from now according to the liquidity premium theory?
5a. Assume that the one-year interest rate is 1%, the two-year interest rate is 2% and the three-year interest rate is 2%. What is the expected one-year interest rate a year from now, and two years from, according to the expectations theory?
b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the three-year interest rate is 2%, the liquidity premium for two-year interest rates is 0.3%. and the liquidity premium for three-year interest rates is 0.4%. What is the expected one-year interest rate a year from now according to the liquidity premium theory?
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Microeconomics
Authors: David Laibson, John List
Global Edition 1st Edition
1292079576, 978-1292079578
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