Liquidity premium theory-expected forward one-year rate

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Under the Liquidity Premium Theory, if today's three-year spot rate is 6%, today's four-year spot rate is 6.5%, the liquidity premium on a 4-year bond is 0.5%, and the liquidity premium on a 3-year bond is 0.4%, what would be the expected forward one-year rate in three years?

Reference no: EM131583388

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