Economics- liquidity premium theory
Economics- liquidity premium theory
Subject: Economics   / General Economics
Question
According to the liquidity premium theory of the term structure of interest rates, if the one-year bond rate is expected to be 55%,
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55%,
and 77%
over each of the next three years, and if the liquidity premium on a three-year bond is 22%,
then the interest rate on a three-year bond is nothing%.
(Round your response to the nearest whole number