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Liquidity Premium Hypothesis One-year Treasury bills currently earn 6.25 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.50

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Liquidity Premium Hypothesis One-year Treasury bills currently earn 6.25 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.50 percent. The liquidity premium on two-year securities is 150 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities? Multiple Choice 6.3750% 6.4500% 4.3000% 12.9000%

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