If a one-year bond currently yields 4% and is expected to yield 6% next year, the liquiditypremium theory suggests the yield today on a two-year bond will be:a. More than 4% but less than 5%.b. 5%.c. 4%.d. More than 5%. A borrower who has to pay an interest rate of 8% rather than 6% due to risk spread will pay:a. $20 more in interest annually for every $100 borrowed.b. 33.3% higher interest in dollar terms.c. 2% in net interest.d. less interest in total over the life of the loan.a. 10,201.0b. 9,805.0 c. 9,812.5 d. 9800. 0please show your work, thank you.
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