One-year Treasury bills currently earn 2.95 percent. You expect that one year from now, 1-year Treasury...

One-year Treasury bills currently earn 2.95 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.15 percent and that two years from now, 1-year Treasury bill rates will increase to 3.65 percent. The liquidity premium on 2-year securities is 0.05 percent and on 3-year securities is 0.15 percent. If the liquidity premium theory is correct, what should the current rate be on 3-year Treasury securities? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Current rate

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jeff jeffy answered 2 years ago

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