Liquidity premium hypothesis one-year treasury bills, Ask an Expert

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Liquidity Premium Hypothesis One-year Treasury bills currently earn 6.30 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.55 percent. The liquidity premium on two-year securities is .155 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities?

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Financial Management, Finance

Category:- Financial Management
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