Question
One-year Treasury bills currently earn 5.40 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.55 percent. The liquidity
One-year Treasury bills currently earn 5.40 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.55 percent. The liquidity premium on two-year securities is .175 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities?
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11.1250%
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3.7080%
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5.4750%
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5.5620%
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Finance Introduction To Institutions Investments And Management
Authors: Ronald W. Melicher, Edgar A. Norton
12th Edition
0471675792, 9780471675792
