Liquidity Premium Hypothesis Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows:

R1 = 7.20%
E(r2) = 8.30%	L2 = .65%
E(r3) = 8.40%	L3 = .75%
E(r4) = 8.70%	L4 = .80%

Using the liquidity premium hypothesis, what is the current rate on a four-year Treasury security?

• 8.1500%

• 9.5000%

• 8.6960%

• 8.1490%