The wall street journal reports that the rate on 3-year

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The Wall Street Journal reports that the rate on 3-year Treasury securities is 7.25% and the rate on 4-year Treasury securities is 8.50%. The one-year interest rate expected in three years is, E(4r1), 4.10%. According to the liquidity premium hypotheses, what is the liquidity premium on the 4-year Treasury security, L4?

Reference no: EM13618611

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