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The real risk-free rate of interest is 1 percent. Inflation is expected to be 5 percent this coming year, jump to 6 percent next

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The real risk-free rate of interest is 1 percent. Inflation is expected to be 5 percent this coming year, jump to 6 percent next year, and increase to 7 percent the year after (Year 3). According to the expectations theory, what should be the interest rate on 1-year, risk-free securities today? O 4.0% O 5.0% 06.0% O 5.5% 4.5%

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