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Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the...

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Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: 1R1=5.8%,E(2r1)=6.4%,L2=0.1%,E(3r1)=6.9%,L3=0.2%,E(4r1)=7.5%,L4=0.3% Using the liquidity premium hypothesis, calculate the current rate for the three-year Treasury security. (1.5 points) A) 5.9% B) 6.2% C) 6.5% D) 6.8%

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