What should current rate be on two-year treasury securities

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One-year Treasury bills currently earn 2.70 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 2.90 percent and that two years from now, 1-year Treasury bill rates will increase to 3.40 percent. The liquidity premium on 2-year securities is 0.15 percent and on 3-year securities is 0.25 percent. If the liquidity premium theory is correct, what should the current rate be on 3-year Treasury securities? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Current rate    %  

One-year Treasury bills currently earn 3.55 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.75 percent. The liquidity premium on 2-year securities is 0.04 percent. If the liquidity theory is correct, what should the current rate be on 2-year Treasury securities? (Round your answer to 2 decimal places.)

Current rate      %

Reference no: EM131850163

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