Determinant of Interest Rates
The real risk-free rate of interest is 3%. Inflation is expected to be 1% this year and 6% during the next 2 years. Assume that the maturity risk premium is zero.
What is the yield on 2-year Treasury securities? Round your answer to two decimal places.
%
What is the yield on 3-year Treasury securities? Round your answer to two decimal places.
%