What should current rate be on two-year treasury securities

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Reference no: EM13976242

One year treasury bills currently earn 5.35 percent. You expect that one year from now, one year treasury bill rates will increase to 5.50 percent. The liquidity premium on two-year securities is 170 percent. If the liquidity theory is correct, what should the current rate be on two-year treasury securities?

A) 11.0200%

B) 5.5100%

C) 5.4250%

D) 3.6730%

Reference no: EM13976242

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