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The Wall Street Journal reports that the rate on three-year Treasury securities is 2.25 percent and the rate on four-year Treasury securities is 2.44 percent.

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The Wall Street Journal reports that the rate on three-year Treasury securities is 2.25 percent and the rate on four-year Treasury securities is 2.44 percent. The one-year interest rate expected in three years, E(471), is 2.89 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the four-year Treasury security. LA? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Liquidity premium % Suppose that the current one-year rate (one-year spot rate) and expected one-year T- bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 0.4%, El2r 1) = 1.4%, E(351) = 10.6%, E(471) = 10.95% Using the unbiased expectations theory, calculate the current (long-term) rates for one, two-, three-, and four-year-maturity Treasury securities. (Round your answers to 3 decimal places. (e.g., 32.161)) One-year Two-year Three-year Four-year Current (Long-Term) Rates % % % % The Wall Street Journal reports that the rate on four-year Treasury securities is 2.3 percent and the rate on five-year Treasury securities is 3 percent. According to the unbiased expectations hypotheses, what does the market expect the one-year Treasury rate to be four years from today, E(571)? (Do not round intermediate calculations, Round your answer to 2 decimal places. (e.g., 32.16)) Expected one-year Treasury rate % Compute the future values of the following annuities first assuming that payments are made on the last day of the period and then assuming payments are made on the first day of the period: (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Payment Years Interest Rate (Annual) Future Value (Payment made on last day of period) Future Value (Payment made on first day of period) $ 223 14 12 % 13 5,555 9 6 15 75,484 168,332 10 6

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