
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:Table 5.1
1 year
2 years
З years
1.50%
2.25%
3.25%
Table 5.1 shows the interest rates for Treasury securities of different maturities. Assume that the liquidity premium theory is
correct.
103) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on the one -year
103)
Treasury bill in two years if the term premium on a two-year Treasury note is 0.25%?
A) 1.875%
B) 2.25%
C) 2.375%
D) 2.5%
104) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on the one-year
Treasury bill in two years if the term premium on a two-year Treasury note is 0.25% and the term
premium on a three-year Treasury note is 0.75%?
A) 2.375%
104)
B) 3.25%
C) 3.50%
D) 4.75%
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