Question 3 a. Using the expectation theory of interest rates determination determine the 2 years spot...
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Question 3 a. Using the expectation theory of interest rates determination determine the 2 years spot rate based on the following: 1 year spot rate :5% 1 year forward rate from period 1 to 2: b. Based on liquidity premium theory now determine the 2 year spot if the liquidity premium is0 .5% using above information. Question 3 a. Using the expectation theory of interest rates determination determine the 2 years spot rate based on the following: 1 year spot rate :5% 1 year forward rate from period 1 to 2: b. Based on liquidity premium theory now determine the 2 year spot if the liquidity premium is0 .5% using above information.
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