The Wall Street Journal reports that the rate on three-year Treasury securities is 5.25 percent and the

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The Wall Street Journal reports that the rate on three-year Treasury securities is 5.25 percent and the rate on four-year Treasury securities is 5.50 percent. The one-year interest rate expected in three years, E ( 4r1 ), is 6.10 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the four-year Treasury security, L4 ? ( LG 2-7 )

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Financial Markets And Institutions

ISBN: 9780078034664

5th Edition

Authors: Anthony Saunders, Marcia Cornett

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