Suppose we observe the three-year Treasury security rate to be 12 percent, the expected one-year rate next year—E(2r1)—to be 8 percent, and the expected one-year rate the following year—E(3r1)—

to be 10 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate? (LG 2-7)