Problem 6-15 Expectations Theory Assume that the real risk-free rate is 2.2 % and that the maturity risk premium is zero. Also assume that the 1-year Treasury bond yield 2-year bond yields 6%. 5% and two decimal places. a. What is the 1-year interest rate that is expected for Year Round your answen b. What inflation rate is expected during Year 2? Round your answer to two decimal places. Comment on why the average interest rate during 2-year periad differs from the 1-year interest rate expected for Year 2 -Select- due to the fact that . I. The difference are dealing with very short-term bonds. For longer term bonds, you would not expect an interest rate differential. due to the fact that there is no liquidity risk premium. I. The difference III. The difference is due to the inflation rate reflected in the two interest rates. The inflation rate reflected in the interest rate any security is the average rate of inflation expected over the security's life. IV. The difference is due to the real risk-free rate reflected in the two interest rates. The real risk-free rate reflected in the interest rate on any security is the average real risk-free rate expected over the security's life. v. The difference is due to the fact that the maturity risk premium is zero