Question: The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate

The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond.

Year

One-Year Bond

Rate

Multiyear Bond Rate

1

2.00%

2.00%

2

5.00%

4.00%

3

6.00%

5.00%

4

7.00%

8.00%

5

9.00%

9.00%

The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places.)

/11

=

%

/21

=

%

/31

=

%

/41

=

%

/51

=

%

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