Ask Question
30 October, 06:16

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 0.010.01 % and the term premium on a three-year Treasury note was 0.040.04 %?

+5
Answers (1)
  1. 30 October, 07:46
    0
    The completed question is

    Use the data on Treasury securities in the following table to answer the question:Date1 year2 year3 year03/05/20100.360.36% 0.860.86% 1.61.6%Source: U. S. Department of the Treasury. 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 0.040.04% and the term premium on a three-year Treasury note was 0.050.05%?

    The expected interest rate is 3.013.01%.

    Explanation:

    Base on the scenario been described in the question, the interest rate in given as 3.013.01%.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “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 ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers