Question: need help with this, so lost. Given the yield curve below and a forecasted MRPn = 0.25 (n-1)%, what is the expected 1-year rate forecast
Given the yield curve below and a forecasted MRPn = 0.25 (n-1)%, what is the expected 1-year rate forecast by the liquidity theory in the fourth year (3 years from now at time t + 3)? The spot yield curve rates are k(1, t) = 4.75% k(2, t) = 4.95% k(3, t) = 5.25% k(4. t) = 5.35% k(5, t) = 5.45% 0 4.75% 4.15% 8.05% 4.95%
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