1. 1. This year(t=0), one-year bond rate is 5%, two-year bond rate is 7%, Using liquidity premium theory, what would be the interest rate of one-year bond in next year(t=1)? 2. If the expected path of one-year interest rates over the next five years is 2 percent, 4 percent, 1 percent, 4 percent, and 3 percent, then the pure expectations theory predicts that the bond with the lowest interest rate today is (show your work) A) one-year bond. B) two-year bond. C) three-year bond. D) four-year bond