One-year government bonds yield 4 percent and 2-year government bonds yield 4.5 percent. Assume that the expectations theory holds. What does the market believe the rate on 1-year government bonds will be one year from today? 5.50 % 5.75% 5% 5.25%

One-year government bonds yield 4 percent and 2-year government bonds yield 4.5 percent. Assume that the expectations theory holds. What does the market believe the rate on 1-year government bonds will be one year from today? 5.50% 5.75% 5% 5.25%