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b) The Edge Tomorrow 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

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b) The Edge Tomorrow 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 ( 411 ), is 6.10 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the four-year Treasury security? (9 marks)

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