Liquidity premium for year
Problem:
Suppose we observe the following rates 0r1=8.75%, 0r2=9.5%, E(1r2)=8.75%. Assume liquidity theory.
Required:
Question: What is the liquidity premium for year 2?
Note: Please show guided help with steps and answer.
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Question: What is the liquidity premium for year 2? Note: Please show guided help with steps and answer.
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