Question
One-year Treasury bills currently earn 3.80 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 4.00 percent. The liquidity
One-year Treasury bills currently earn 3.80 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 4.00 percent. The liquidity premium on 2-year securities is 0.09 percent. If the liquidity premium theory is correct, what should the current rate be on 2-year Treasury securities?
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Melissa Hart
7th Edition
1265521972, 978-1265521974
