Question: Question: What do you expect to happen to the yields on European Sovereign Debt from Russia Ukraine war? Why? Write down an equation representing the

Question:

What do you expect to happen to the yields on European Sovereign Debt from Russia Ukraine war? Why? Write down an equation representing the liquidity premium theory of the term- structure of interest rates. Explain the intuition behind your model. Given that bond traders expect inflation will change even further in 2022-23, draw and explain the shape of todays yield curve (for 3mth - 2 year notes)

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