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Expected Interest Rate

The real risk-free rate is 3.25%. Inflation is expected to be 1.75% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero.


a. What is the yield on 2-year Treasury securities? Round your answer to two decimal places.

%


b. What is the yield on 3-year Treasury securities? Round your answer to two decimal places.

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Casey Durgan
Casey DurganLv2
28 Sep 2019

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