The One-Year Interest Rate Is 4

question 52

Multiple Choice

The one-year interest rate is 4%.The interest rate for a two-year security is 6%.The one-year interest rate one year from now is 8.34%.According to the liquidity preference theory,the risk premium for the second one-year investment is

• A) 0.50%.
• B) 0.34%.
• C) 0.30%.
• D) 1.66%.

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