Question 20 The 1yr interest rates over the next five years will be 6%, 6%, 7%,...
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Question 20 The 1yr interest rates over the next five years will be 6%, 6%, 7%, 7%, and 7%. Let's further assume that the liquidity premium for 1yr, 2yr, 3yr, 4yr, and 5yr bonds are 0.1%, 0.2%, 0.3%, 0.5%, and 0.7% respectively. What is the interest rate on three-year bonds under the Liquidity Premium Theory based on the given facts? 6.33% O 6.63% 7.07% 7.54% Question 20 The 1yr interest rates over the next five years will be 6%, 6%, 7%, 7%, and 7%. Let's further assume that the liquidity premium for 1yr, 2yr, 3yr, 4yr, and 5yr bonds are 0.1%, 0.2%, 0.3%, 0.5%, and 0.7% respectively. What is the interest rate on three-year bonds under the Liquidity Premium Theory based on the given facts? 6.33% O 6.63% 7.07% 7.54%
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