Question: A one - year and two - year bonds currently pays 4 . 2 % and 5 % , respectively. What is the expected interest

A one-year and two-year bonds currently pays 4.2% and 5%, respectively. What is the expected interest rate on a oneyear bond next year according to the liquidity premium theory if the two-year term premium is 0.2%?
3.8%
5.4%
4.8%
5.6%
A one-year and two-year bonds currently pays 4.2% and 5%, respectively.

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