Suppose the interest rate on a 1-year T-bond is 5.00% and that on a 2-year T-bond is 7.90%. Assuming the pure expectations theory is correct, what is the market's forecast for 1-year rates 1 year from now? Round the intermediate calculations to 4 decimal places and final answer to 2 decimal places. O a. 13.16 O b. 13.49 O c. 10.44 O d. 12.73 e. 10.88

Suppose the interest rate on a 1-year T-bond is 5.00% and that on a 2-year T-bond is 7.90\%. Assuming the pure expectations theory is correct, what is the market's forecast for 1 -year rates 1 year from now? Round the intermediate calculations to 4 decimal places and final answer to 2 decimal places. a. 13.16 b. 13.49 c. 10.44 d. 12.73 e. 10.88