Suppose you are asked to make a loan for 10% from one year for now; you decided to compare interest rates with Government bonds and make at least 2% premium over that. One year bond has 5% and two year rate 7%. You have been harined about liquidity risk, so you evaluated it at 0.5%. Given this data, are you willing to make a loan? Assume that you make investment decisions based on the expectations theory. Based on research, you have obtained the following information about certain market interest rates: You can borrow at 5% and lend at 4.5% for one year You can borrow at 6% and lend for 6.5% for two years One-year rate one year from now is 7% for borrowing and lending What decision is the most profitable for you? Show your calculations