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.   Suppose that the one-year interest rate over the next four years is expected to be...

.   Suppose that the one-year interest rate over the next four years is expected to be 2%, 3%, 4% and 6%.

               a)   Find the interest rate on a three- year bond.

               b)   Find the interest rate on a four-year bond

               c)   Find the interest rate on a four -year bond when the liquidity premium of the investor to  

                     hold a four-year bond is 2%.

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