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The current rate of return on a one-year U.S. Government security is 3%. The face value of the bond is $1,000. The rate of return

The current rate of return on a one-year U.S. Government security is 3%. The face value of the bond is $1,000. The rate of return on a two-year U.S. Government security, of the same face value is 5%. according to the expectations theory, What is the return on a one-year U.S. Government security purchased one year from today? A) 10.25% B) 7.04% C) 7.24% D) 9.95%

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