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What is the liquidity premium on a three-year treasury

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The Wall Street Journal reports the rate on two-year Treasury securities is 4.15% and the rate on three-year Treasury securities is 5.27%. The one-year interest rate expected in two years, E(3r1), is 7.11%. According to the liquidity premium theory, what is the liquidity premium on a three-year Treasury, L3?

Reference no: EM132459460

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