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One-year Treasury bills currently earn 4.50 percent. You expect that one year from now, one-year Treasury bill rates will increase to 4.65 percent. The liquidity
One-year Treasury bills currently earn 4.50 percent. You expect that one year from now, one-year Treasury bill rates will increase to 4.65 percent. The liquidity premium on two-year securities is .085 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities?
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