Question: Please show Excel Formula A B C D 2 Consider the following short-term rates and a liquidity premium: 3 4 Er1) 0.04 5 E(r2) 0.05

Please show Excel Formula A B C D 2 Consider the

Please show Excel Formula

A B C D 2 Consider the following short-term rates and a liquidity premium: 3 4 Er1) 0.04 5 E(r2) 0.05 6 E[r3) 0.07 7 Liquidity Premium 0.02 8 9 Required: 10 First calculate spot rates if they are solely a function of Expectation Theory. Next, if the liquidity rate is a constant 2.00 percent for 11 rates. Finally calculate the spot rates combining both the Expectations Theory with the liquidity premium. 12 13 (Use cells A4 to B7 from the given information to complete this question.) Spot rate (%), Expectations Forward Rate (%), with Spot rate (%), Expectations 15 Year Theory Liquidity Premium Theory + Liquidity Premium 16 14 1 17 18 2 3 A B C D 2 Consider the following short-term rates and a liquidity premium: 3 4 Er1) 0.04 5 E(r2) 0.05 6 E[r3) 0.07 7 Liquidity Premium 0.02 8 9 Required: 10 First calculate spot rates if they are solely a function of Expectation Theory. Next, if the liquidity rate is a constant 2.00 percent for 11 rates. Finally calculate the spot rates combining both the Expectations Theory with the liquidity premium. 12 13 (Use cells A4 to B7 from the given information to complete this question.) Spot rate (%), Expectations Forward Rate (%), with Spot rate (%), Expectations 15 Year Theory Liquidity Premium Theory + Liquidity Premium 16 14 1 17 18 2 3

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