According to the liquidity premium hypothesis

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Reference no: EM131979282

1. The Wall Street Journal reports that the rate on three-year Treasury securities is 7.25 percent and the rate on four-year Treasury securities is 8.70 percent. The one-year interest rate expected in year four is E(4r1), 9.25 percent. According to the liquidity premium hypothesis, what is the liquidity premium on the four-year Treasury security, L4?

2. Cause of the financial failure of large institutions in 2008 (short question).

Reference no: EM131979282

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