Suppose the interest rate on a 1-year T-bond is 2.8% and that on a 2-year T-bond is 4.6%. Assuming the pure expectations theory is correct, what is the market's forecast for 1-year rates 1 year from now? Hint: Use the following equation, (1 + r_T2)² = (1 + r_T1) x (1 + ₁r_T1).

Group of answer choices

6.43%

8.04%

8.27%

7.41%