Question: Below is a table showing the current and expected future one-year interest rates for bonds. Year One-Year Bond Rates 1 3.00% 2 4.00% 3 6.00%

Below is a table showing the current and expected future one-year interest rates for bonds.

Year One-Year Bond Rates
1 3.00%
2 4.00%
3 6.00%
4 9.00%

Below is a table showing the current and multi-year interest rates for bonds.

Year Multi-year Bond Rates
1 3.00%
2 4.00%
3 5.20%
4 7.00%

What is the liquidity premium for a 3 year bond?

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