4. Pure expectations theory: Three-year bonds Valerie would like to invest a certain amount of money for three years and considers investing in a one-year bond that pays 5 percent and for one year. Valerie would then like to buy a second one-year bond that is expected to pay the one-year forward rate one year from now and finally a third one-year bond that is expected to pay the one-year forward rate two years from now. If the annualized interest rate on a three-year bond is 8 percent, the forward rate of a one-year security beginning two years from now is percent