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The interest rate on one-year treasury bonds is 1.0 percent, the rate on two-year t-bonds is 1.1 percent, and the rate on three-year t-bonds is

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The interest rate on one-year treasury bonds is 1.0 percent, the rate on two-year t-bonds is 1.1 percent, and the rate on three-year t-bonds is 1.2 percent. Using the expectations theory, compute the expected one-year interest rates the third year (Year 3 only). \begin{tabular}{|l|} \hline 1.4% \\ \hline 1.1% \\ \hline 1.2% \\ \hline 1.0% \\ \hline \end{tabular}

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