nts The real risk-free rate of interest is 1 percent. Inflation is expected to be 5 percent this coming year, jump to 7 percent next year, and increase to 8 percent the year after (Year 3). According to the expectations theory, what should be the interest rate on 2-year, risk-free securities today? 8.0% O 8.5% 0 6.5% O 7.0% O 7.5% nts The real risk-free rate of interest is 1 percent. Inflation is expected to be 5 percent this coming year, jump to 7 percent next year, and increase to 8 percent the year after (Year 3). According to the expectations theory, what should be the interest rate on 2-year, risk-free securities today? 8.0% O 8.5% 0 6.5% O 7.0% O 7.5%