Imagine that the interest rate on two year deposit is 1.85% and interest rate on the one year deposit is 1.0%.

Based on these interest rates what would be an expected one year interest rate one year from now?

If we also know that deposit with three years term yields 2% what would be an expected one year interest rate two years from now?

¹Term to maturity means that it can be for example three last years of a 10 year bond

²1 percentage point equals 100 basis points