What should current rate be on two-year treasury securities

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Reference no: EM131021189

Liquidity Premium Hypothesis One-year Treasury bills currently earn 5.85 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.10 percent. The liquidity premium on two-year securities is .110 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities?

12.0600%

5.9750%

6.0300%

4.0200%

Reference no: EM131021189

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