According to the liquidity premium hypotheses what is the


Liquidity Premium Theory

The Wall Street Journal reports that the rate on 7-year Treasury securities is 5.85 percent and the rate on 8-year Treasury securities is 6.10 percent. The 1-year risk-free rate expected in seven years is, E(8r1), is 6.70 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the 8-year Treasury security, L8? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Liquidity premium ______________%

Request for Solution File

Ask an Expert for Answer!!
Financial Management: According to the liquidity premium hypotheses what is the
Reference No:- TGS02635499

Expected delivery within 24 Hours