Question: Pleas answer both parts using the table, thank you. 3. Assume that the liquidity premium for all five years is given in the following table.

Pleas answer both parts using the table, thank you.

Pleas answer both parts using the table, thank you. 3. Assume that

3. Assume that the liquidity premium for all five years is given in the following table. Calculate the one-year interest rates in year 1, 2, 3, 4 and 5 based on the liquidity premium theory. 3 Year 1 2 3 4 5 Liquidity Premium 0% 0.5% 1% 1.5% 2% 4. What do you observe in the future short-term interest rates? How does this pattern imply the possibility of entering a recession

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