Assume that the real risk$-$free rate is $0\mathrm{.}5\%$ and that the maturity risk premium is zero. A $1-$year Treasury bond yield is $22\%$ and a $2-$year Treasury bond yields $24\%.$

a$)$ What is the $1-$year interest rate that is expected for Year $2?$

b$)$ What inflation rate is expected during Year $2?$

Question $13$ options:

a$)26\mathrm{.}03\%$; b$)25\mathrm{.}53\%$

a$)26\mathrm{.}03\%$; b$)25\mathrm{.}03\%$

a$)25\mathrm{.}53\%$; b$)26\mathrm{.}03\%$

a$)26\mathrm{.}53\%$; b$)26\mathrm{.}53\%$

a$)27\mathrm{.}03\%$; b$)25\mathrm{.}53\%$