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What is the 4-year short rate

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You check the spot curve and find that the 1-year spot rate is 8.36%, the 2-year spot rate is 7.70%, the 3-year spot rate is 4.90%, the 4-year spot rate is 6.63%, and the 5-year spot rate is 7.89%.

You believe in the liquidity preference theory and assume that there is a constant liquidity premium of 2.50%.

What is the 4-year short rate?

Reference no: EM132743721

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