This ques Question 2 (a) As per the expectations theory the relationship between the current short-term interest rate and expectations about the future short-term interest rates are explained by the following rates: Current one year bond interest rate = 3%, Expected interest rate of one year bond starting after one year = 4% Expected interest rate of one year bond starting after two years. = 5% Expected interest rate of one year bond starting after three years = 3.5% Find out the current two year bond interest rate. (Marks 4)