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What is the 2-year short rate

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Reference no: EM132743724

You check the spot curve and find that the 1-year spot rate is 9.48%, the 2-year spot rate is 7.19%, the 3-year spot rate is 7.86%, the 4-year spot rate is 6.23%, and the 5-year spot rate is 4.25%.

You believe in the liquidity preference theory and assume that there is a constant liquidity premium of 1.50%.

What is the 2-year short rate?

Your answer should be in percentage points to 2 decimal places (ex: 2.50).

Reference no: EM132743724

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