The current rate be on three-year treasury securities

Assignment Help Financial Management

Reference no: EM131022949

One-year Treasury bills currently earn 3.25 percent. You expected that one year from now, one-year Treasury bill rates will increase to 3.45 percent and that two years from now, one-year Treasury bill rates will increase to 3.95 percent. The liquidity premium on two-year securities is 0.05 percent and on three-year securities is 0.15 percent. If the liquidity theory is correct, what should the current rate be on three-year Treasury securities?

3.25 percent

3.55 percent

3.62 percent

4.10 percent

Reference no: EM131022949

Questions Cloud

What is percent rate of return-present value of perpetuity : What is the present value of a perpetuity of $4,887 if the discount rate is 10.26%? How long will it take to double your money at an annually compounded interest rate of 8.4%? If you pay $1,463 for a perpetuity of $135, what is your percent rate of r..

How you will implement your plan to improve communication : As you begin to develop your plan of action, what important considerations will you address to improve the communication and collaborative effort among the group?

Mason companys selling price for its only product : What is the break-even point in units for Mason Company’s product?

Was this legislation an example of fiscal policy : In 2009, Congress and the president enacted "cash for clunkers" legislation that paid up to $4,500 to people buying new cars if they traded in an older, low-gas-mileage car. Was this legislation an example of fiscal policy? Does your answer depend..

The current rate be on three-year treasury securities : One-year Treasury bills currently earn 3.25 percent. You expected that one year from now, one-year Treasury bill rates will increase to 3.45 percent and that two years from now, one-year Treasury bill rates will increase to 3.95 percent. The liquidit..

Degree of independence of the standard-setter : Is there a connection between the amount of political lobbying in a country and the degree of independence of the standard-setter from (a) government departments, and (b) the accountancy profession?

Are federal expenditures as a percentage of gdp higher : What is the difference between federal purchases and federal expenditures? Are federal purchases higher today as a percentage of GDP than they were in 1960? Are federal expenditures as a percentage of GDP higher?

Prepare a financial analysis of warehouse distribution : Develop a PowerPoint presentation that answers the following questions: Prepare a financial analysis of Warehouse Distribution, Inc.(I will upload the income statements for Warehouse Distribution), comparing the firm’s financial performance between t..

Tax basis in stock after the distribution : Jayhawk Company reports current E&P of $317,500 and accumulated E&P of negative $295,000. Jayhawk distributed $480,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine’s tax basis in her Jayhawk stock is $99,250. What i..

User Account

All Pages