Question: 4 a . Suppose we observe the three - year Treasury security rate to be 1 2 percent, the expected one - year rate next

4a. Suppose we observe the three-year Treasury security rate to be 12 percent, the expected one-year rate next year to be 8 percent, and the expected one-year rate the following year to be 10 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate? 5a. The Wall Street Journal reports that the rate on three-year Treasury securities is 5.25 percent and the rate on four-year Treasury securities is 5.50 percent. The one-year interest rate expected in three years is 6.10 percent. According to the liquidity premium theory, what is the liquidity premium on the four-year Treasury security? 5b. Suppose we observe the following rate: \[\begin{array}{l}{}_{0} R_{1}=10\%\\{}_{0} R_{2}=14\%\\ E\left({}_{1} R_{1}\right)=18\%\end{array}\] If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium of for year 2?
4 a . Suppose we observe the three - year

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