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The Wall Street Journal reports that the rate on three-year Treasury securities is 2.99% and the rate on four-year Treasury securities is 3.34%. The liquidity
The Wall Street Journal reports that the rate on three-year Treasury securities is 2.99% and the rate on four-year Treasury securities is 3.34%. The liquidity premium in four years, L4, is 0.3%. According to the liquidity premium theory, what is the one-year interest rate expected in year four, E(4r1)? a) 1.4% b) 10.43% c) .04% d) .75% e) none of the above. Just need answer, no steps, thanks.
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