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The real risk-free rate of interest is 2 percent. Inflation is expected to be 3 percent this coming year, jump to 5 percent next year,

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The real risk-free rate of interest is 2 percent. Inflation is expected to be 3 percent this coming year, jump to 5 percent next year, and increase to 6 percent the year after (Year 3). According to the expectations theory, what should be the interest rate on 1-year, risk-free securities today? 5.00% 4.50% 4.00% 5.50% 6.00%

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