Question: Assume that the current yield on a one-year security is 6.0 percent and that the yield on a two-year security is 7.2 percent.For this question,

Assume that the current yield on a one-year security is 6.0 percent and that the yield on a two-year security is 7.2 percent.For this question, assume that there is a liquidity premium on a two-year security of 0.4 percent.Accounting for the liquidity premium, determine the one-year forward rate (or the one-year rate one year from now).

8.04 percent.

7.62 percent.

8.45 percent.

7.03 percent.

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