If the liquidity premium theory of the term structure of
Suppose we observe the following rates: 1R1 = 0.50%, 1R2 = 1.00%, and E(2r1) = 0.909%. If the liquidity premium theory of the term structure of risk-free rates holds, what is the liquidity premium for year 2, L2?
Liquidity premium %?
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suppose we observe the following ratesnbsp 1r1 050nbsp 1r2 100 and e2r1 0909nbsp if the liquidity premium theory of
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