14. Problem 6.14 (Expectations Theory and Inflation) eBook Suppose 2-year Treasury bonds yield 4.0%, while 1-year bonds yield 2.9%. r* is 2%, and the maturity risk premium is zero. a. Using the expectations theory, what is the yield on a 1-year bond, 1 year from now? Calculate the yield using geometric average. Do not round intermediate calculations. Round your answer to two decimal places. % b. What is the expected inflation rate in Year 1? Year 2? Do not round intermediate calculations. Round your answers to two decimal places. Expected inflation rate in Year 1: % Expected inflation rate in Year 2: %