Table 51 Table 51 Shows the Interest Rates for Treasury Securities of Different

question 50

Multiple Choice

Table 5.1
$$\begin{array} { | c | c | r | } \hline 1 \text { year } & 2 \text { years } & 3 \text { years } \\\hline 1.50 \% & 2.25 \% & 3.25 \% \\\hline\end{array}$$
Table 5.1 shows the interest rates for Treasury securities of different maturities. Assume that the liquidity premium theory is correct.
-Refer to Table 5.1 On this day,what did investors expect the interest rate to be on the one-year Treasury bill in two years if the term premium on a two-year Treasury note is 0.25%?

• A) 1.875%
• B) 2.25%
• C) 2.375%
• D) 2.5%

---

Definitions:

Plain Language

The use of clear, straightforward, and easily understandable language aimed at ensuring effective communication with the audience.

Audience

The group of individuals targeted or reached by a piece of content, speech, performance, or advertisement.

Noun

A category of words that denote a person, place, thing, or idea, essential components of sentences.

Affect

A term in psychology that refers to the experience of feeling or emotion.