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Barney Lloyd Fife, the country's leading economist has forecasted one-year Treasury bill rates for the following five years as follows: Year 1-year Rate (%) 1

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Barney Lloyd Fife, the country's leading economist has forecasted one-year Treasury bill rates for the following five years as follows: Year 1-year Rate (%) 1 5.25 2 6.15 3 6.50 4 7.25 5 8.10 You have a liquidity premium of 0.25% for the next two years and 0.50 thereafter. Would you be willing to purchase a four year T-bond at 6.75% interest rate? Yes. It is above your required rate of 5.75% Not really. Your required rate is 5.46% It will not make a difference because your required rate is exactly 6.75% too. No. It is just below your required rate of 6.79%

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