What is liquidity premium on seven-year treasury security

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Reference no: EM131900069

The Wall Street Journal reports that the rate on 6-year Treasury securities is 5.75 percent and the rate on 7-year Treasury securities is 6.00 percent. The 1-year risk-free rate expected in six years is, E(7r1), is 6.60 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the 7-year Treasury security, L7? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Reference no: EM131900069

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