The interest rate on a one-year bond selling today is 4% and the expected interest rate...

The interest rate on a one-year bond selling today is 4% and the expected interest rate on a one-year bond selling one year from today is 2%. If the liquidity premium is 0.5%, then according to liquidity premium theory, the interest rate on a two-year bond selling today is about

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According to Liquidity Premium theory, interest rate on a two year bond selling today is 3.5%

Rahul Sunny answered 2 years ago

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