Assume that the real risk$-$free rate is $2\%$ and that the maturity risk premium is zero. If a $1-$year Treasury bond yield is $4\%$ and a $2-$year Treasury bond yields $8\%,$ what is the $1-$year interest rate that is expected for Year $2?$ Calculate this yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

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What inflation rate is expected during Year $2?$ Do not round intermediate calculations. Round your answer to two decimal places.

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Comment on why the average interest rate during the $2-$year period differs from the $1-$year interest rate expected for Year $2.$