Answer:
The yield on 2-year Treasury securities is 5%
Explanation:
The computation of the yield on 2 year treasury securities is shown below:
The yield on the 2 -year treasury security is :
= Risk free rate of return + inflation premium + maturity risk premium
= 2% + (2% + 4%) ÷ 2 + 0 %
= 2% + 3% + 0
= 5%
Hence, the yield on 2-year Treasury securities is 5%
And, the same is to be considered
We simply applied the above formula
