The real risk-free rate is 2.00%. Inflation is expected to be 2.00% this year and 4.75%...

The real risk-free rate is 2.00%. Inflation is expected to be 2.00% this year and 4.75% during the next 2 years. Assume that the maturity risk premium is zero.

What is the yield on 2-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.

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What is the yield on 3-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.

%

Expert Solution

Answer:-

Yield on 2-year Treasury securities = 5.38%

Yield on 3-year Treasury securities = 5.83%

Explanation:-

jeff jeffy answered 2 years ago

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