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Question: One-year treasury bills currently yield 2.43 percent. You expect that one year from now, one-year treasury bill rates will increase to 2.83 percent, and two years from now, one-year treasury bill rates will increase to 3.04 percent. The liquidity premium on two-year securities is 0.08 percent and on three -year securities, 0.14 percent. If liquidity premium theory is correct, what should the current rate be on three-year treasury securities?

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Category:- Basic Finance
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