Multiple Choice
The yield on a one-year bond is currently 4% and the expected yield on one-year bonds for the next two years is 5% and 6%. If the liquidity premium is 0.5%, what is the yield on a bond with two years to maturity?
A) 4.5%
B) 5%
C) 5.5%
D) 6%
Correct Answer:
Verified
Correct Answer:
Verified
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