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Liquidity Premium Hypothesis One-year Treasury bills currently earn 5.70 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.95

Liquidity Premium Hypothesis One-year Treasury bills currently earn 5.70 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.95 percent. The liquidity premium on two-year securities is .095 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities? 3.9150% 5.8720% 11.7450% 5.8250%

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