One-year Treasury securities yield 3.25%. The market anticipates that 1-year from now, 1-year Treasury securities will yield 4.48%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities/ Calculate the yield using the arithmetic average. State your answer as a percentage to 2 decimal places. Do not include the % symbol. Give typing answer with explanation and conclusion

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.