Liquidity premium theory, One-year Treasury bills currently

Liquidity premium theory

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Reference no: EM131842142

Liquidity Premium Theory

One-year Treasury bills currently earn 3.35 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.55 percent. The liquidity premium on 2-year securities is 0.08 percent. If the liquidity theory is correct, what should the current rate be on 2-year Treasury securities? (Round your answer to 2 decimal places.)

Current rate %

Reference no: EM131842142

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