Question: IV. Compute the two-year nominal interest rate using the exact formula and the approximation formula for each set of assumptions listed in (a) through (c).

IV. Compute the two-year nominal interest rate using the exact formula and the approximation formula for each set of assumptions listed in (a) through (c). a. b. c. i.-2%; it+1-3% It = 2 %, i?1-1096 I.-290; it+1-3%. The term premium on a two-year bond is 1%

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