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6 years ago
A one-year bond has an interest rate of 3% and is expected to fall to 2.5% next year and 2% in two years. The term premium for a two-year bond is 0.3% and for a three-year bond is 0.5%. What are the interest rates on a two-year bond and three-year bond according to the liquidity premium theory?
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Money, Banking, and the Financial System

Money, Banking, and the Financial System


Edition: 3rd
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vehmeinvehmein
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6 years ago
Just got PERFECT on my quiz
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