Finance: One-year Treasury bills currently earn 3.45 percent

Finance: One-year Treasury bills currently earn 3.45 percent

Subject: Business    / Finance
Question
One-year Treasury bills currently earn 3.45 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.65 percent. The liquidity premium on 2-year securities is 0.05 percent. If the liquidity theory is correct, what should the current rate be on 2-year Treasury securities? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Current Rate _____________%