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Suppose that the interest rate on a one-year bond is 5% today and the interest rates expected on 1-year bonds in the future are 6% in one year, 6.5% in two years, and 7% in three years.

a. According to the expectations theory of the term structure, what are the interest rates today on a 2-year bond, a 3-year bond, and a 4-year bond?

b. If the term premium equals 0.5% times the number of years to maturity of a bond for times to maturity of two, three, and four years, what are the interest rates today on a 2-year bond, a 3-year bond, and a 4-year bond? Assume no term premium on 1-year bonds.