Suppose the expected one-month rates of return are 3% p.a., 4.5% p.a. and 7% p.a. for the month ending in one, two and three months’ time respectively. Further, it is found that the liquidity premium for the second and third month is 1.75% and 2.40% respectively. According to the liquidity premium theory, what is the three-month yield?
https://papertowriters.com/wp-content/uploads/2020/07/Writerspng-300x62.png 0 0 admin https://papertowriters.com/wp-content/uploads/2020/07/Writerspng-300x62.png admin2021-11-06 09:22:382021-11-06 09:22:38Suppose the expected one-month rates of return are 3% p.a., 4.5% p.a. and 7% p.a. for the month endi