What did investors expect the interest rate

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Reference no: EM131305386

Use the data on Treasury securities in the following table to answer the question:

Date	1 year	2 year	3 year
3/5/2010	0.38%	0.91%	1.43%

Assuming that the liquidity premium theory is correct, on March 5, 2010, what did investors expect the interest rate to be on the one-year Treasury bill two years from that date if the term premium on a two-year Treasury note was 0.02% and the term premium on a three-year Treasury note was 0.06%?

Reference no: EM131305386

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