QUESTION 19 The real interest rate is currently 0.25%, and expected to rise to 0.35% in year 2 and to 0.80% in year 3. Inflation is expected to be 0.5% for three years. What should be the two-year zero coupon rate (1R2) and the three-year zero coupon rate (1R3) under the Expectations Theory? A. 1R2 = 0.78%; 1R3 = 0.95% B. 1R2 = 0.78%; 1 R3 = 0.92% C. 1R2 = 0.80%; 1 R3 = 0.97% D. 1R2 = 0.78%; 1R3 = 0.88% E. 1R2 = 0.78%; 1 R3 = 0.98%