What is the liquidity premium on the 5-year treasury

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Reference no: EM132051554

The Wall Street Journal reports that the rate on 4-year Treasury securities is 7.05 percent and the rate on 5-year Treasury securities is 7.25 percent.

The 1-year risk-free rate expected in four years is, E(5r1), is 7.85 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the 5-year Treasury security, L5? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Reference no: EM132051554

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