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What should the current rate be on two-year treasury

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Reference no: EM133001895

Liquidity Premium Hypothesis

Problem 1: One-year Treasury bills currently earn 4.70 percent. You expect that one year from now, one-year Treasury bill rates will increase to 4.85 percent. The liquidity premium on two-year securities is .105 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities?

Reference no: EM133001895

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