he Wall Street Journal reports that the rate on three-year Treasury securities is 2.99% and the rate on four-year Treasury securities is 3.34%. The liquidity premium in four years, L4, is 0.3%. According to the liquidity premium theory, what is the one-year interest rate expected in year four, E(4ri)? 0.04% 10.43% 1.4% 0.75% None of the above.

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A:

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