"> (Answered) 1) Date 1Year 2Year 3 Year 3/5/2010 0.36 % 0.94 % 1. - Tutorials Prime

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(Answered) 1) Date 1Year 2Year 3 Year 3/5/2010 0.36 % 0.94 % 1.


1) Date 1Year 2Year 3 Year 3/5/2010 0.36 % 0.94 % 1.


1)Date                         1Year               2Year                  3 Year3/5/2010                 0.36 %               0.94 %                   1.54 % Assuming that the liquidity premium theory is​ correct, on March​ 5, 2010, what did investors expect the interest rate to be on the​ one-year Treasury bill two years from that date if the term premium on a​ two-year Treasury note was 0.04 ​% and the term premium on a​ three-year Treasury note was 0.08 ​%?  The expected interest rate is __  ​% ? ​(Round your response to two decimal​ places.) 2) Suppose that the interest rate on a​ one-year Treasury bill is currently 7​% and that investors expect that the interest rates on​ one-year Treasury bills over the next three years will be 8​%, 9​%, and 7​%. Use the expectations theory to calculate the current interest rates on​ two-year, three-year, and​ four-year Treasury notes.  The current interest rate on​ two-year Treasury notes is __%? ​(Round your response to two decimal​ places.) 

 


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