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Based on economists forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R
Based on economists forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows:
R1 | = | 1.45 | % | |||||
E(2r1) | = | 2.35 | % | L2 | = | 0.05 | % | |
E(3r1) | = | 2.75 | % | L3 | = | 0.07 | % | |
E(4r1) | = | 3.20 | % | L4 | = | 0.12 | % | |
Using the liquidity premium theory, determine the current (long-term) rates. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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