You observe the following curve for Treasury securities:

Maturity

Yield

1 year

6.0%

2 years

6.3%

3 years

6.5%

4 years

7.0%

5 years

7.2%

Assume that the pure expectations hypothesis holds. What is your investment return if you plan to lend for 2 years, starting 3 year from today?

Select one:

a.6.75%

b.7.70%

c.8.26%

d.6.80%

e.7.80%