The Wall Street Journal Reports That the Rate on Three-Year

The Wall Street Journal reports that the rate on three-year Treasury securities is 4.75 percent and the rate on four-year Treasury securities is 5.00 percent. The one-year interest rate expected in three years is E(₄r₁) , 5.25 percent. According to the liquidity premium theory, what is the liquidity premium on the four-year Treasury security, L₄?

A) 0.0375 percent
B) 0.504 percent
C) 5.01 percent
D) 5.04 percent