Suppose we observe the following rates 1r1 075 1r2 125, Operation Management

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Suppose we observe the following rates 1r1 075 1r2 125

Question: Suppose we observe the following rates: ₁R₁ = 0.75%, ₁R₂ = 1.25%, and E(₂r₁) = 0.919%. If the liquidity premium theory of the term structure of risk-free rates holds, what is the liquidity premium for year 2, L₂? (Do not round intermediate calculations and round your answer to 3 decimal places.)

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Operation Management: Suppose we observe the following rates 1r1 075 1r2 125

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Operation Management: Suppose we observe the following rates 1r1 075 1r2 125

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