Consider the liquidity premium theory

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Consider the Liquidity Premium Theory is the correct theory of the term structure of interest rates. Calculate the interest rates in the term structure for maturities of one (n=1) to five (n=5) years sold today and plot the resulting curve for the following series of one-year expected interest rates over the next five years: 9%, 8%, 7%, 6%, 5%. The term premium is given by 2*n %.

Reference no: EM131107476

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