Problem 6-17 Liquidity Premium Theory (LG6-5)

The Wall Street Journal reports that the rate on 7-year Treasury securities is 5.85 percent and the rate on 8-year Treasury securities is 6.10 percent. The 1-year risk-free rate expected in seven years is, E(₈r₁), is 6.70 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the 8-year Treasury security, L₈? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Liquidity premium ______________%