Assume the current interest rate on a one-year Treasury bond (₁R₁) is 5.50 percent, the current rate on a two-year Treasury bond (₁R₂) is 5.95 percent, and the current rate on a three-year Treasury bond (₁R₃) is 8.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on Treasury bills during year 3, ₃f₁?

Multiple Choice

10.29 percent

11.69 percent

12.29 percent

13.79 percent