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You observe the following rates: a one-year Treasury has a rate of 7.3%, a 2-year Treasury has a rate of 15.6%. You read in the
You observe the following rates: a one-year Treasury has a rate of 7.3%, a 2-year Treasury has a rate of 15.6%. You read in the Wall Street Journal that all investors agree that the one-year rate next year will be 17.3%. Given this information, calculate the liquidity premium for year 2. Enter your answer in decimals (not percent) and round to 4 decimal places, for example 0.1234
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