Business, 21.02.2020 23:50 linreaburg

One-year Treasury bills currently earn 2.95 percent. You expect that one year from now, one-year Treasury bill rates will increase to 3.15 percent and that two years from now, one-year Treasury bill rates will increase to 3.35 percent. The liquidity premium on two-year securities is 0.05 percent and on three-year securities is 0.15 percent.
a. If the liquidity theory is correct, what should the current rate be on three-year Treasury securities?

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One-year Treasury bills currently earn 2.95 percent. You expect that one year from now, one-year Tre...

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