1) The Wall Street Journal reports that 1-year T-bills are currently earning 3.48%. You are expecting the annual inflation rate in 2022 to be 8.50%. What is the real risk-free rate (in %) using the Fisher effect approximation?

Round your percentage answers to 2 decimal places. Do NOT enter the percentage (%) sign (e.g., if your result is 1.23%, enter 1.23).

2) The current one-year Treasury bill rate is 3.48% and the expected one-year rate 12 months from now is 4.23%. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?

Do not round intermediate calculations. Round your percentage answers to 2 decimal places. Do NOT enter the percentage (%) sign (e.g., if your result is 1.23%, enter 1.23).