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James buys 2-year bonds with interest rates of 4.00% and 6.50% respectively. John buys a 2-year bond with an interest rate of 7.00% and 10%

James buys 2-year bonds with interest rates of 4.00% and 6.50% respectively. John buys a 2-year bond with an interest rate of 7.00% and 10% respectively. Calculate the expected interest rate of James and John using pure expectation theory?

A - The expected interest rate of James is 8.50% and John is 5.50%

B - The expected interest rate of James is 5.00% and John is 6.00%

C - The expected interest rate of James is 5.50% and John is 7.00%

D - The expected interest rate of James is 5.25% and John is 8.50%

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