# Yield on treasury securities

The real risk-free rate is 3%. Inflation is expected to be 2% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury securities? Please show all work.

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#### Solution Preview

The yield on treasury securities is calculated as

Yield = Real risk free rate+ Inflation premium + maturity risk premium

We are ...

#### Solution Summary

The solution explains how to determine the yield on treasury securities

$2.49