One-Year Treasury Bills Currently Earn 4

question 85

Multiple Choice

One-year Treasury bills currently earn 4.5 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.65 percent. The liquidity premium on two-year securities is 0.05 percent. If the liquidity theory is correct, what should the current rate be on two-year Treasury securities?

• A) 5.24 percent
• B) 5.59 percent
• C) 5.65 percent
• D) 5.95 percent

---

Definitions:

Stimulus Discrimination

The learned ability to distinguish between similar stimuli and respond differently based on their associative properties with reinforcement or punishment.

Secondary Reinforcer

Indicates any stimulus that has become reinforcing through its association with a primary reinforcer, often used in behavioral conditioning.

Probability

A measure of the likelihood that a particular event will occur, often expressed as a number between 0 and 1.

Operant Conditioning

a method of learning that uses rewards and punishments to influence behavior.