What is the 1-year interest rate that is expected for year, Financial Management

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What is the 1-year interest rate that is expected for year

Assume a 1-year Treasury bond yields 5% and a 2-year Treasury bond yields 7%.

(Round your answer to the nearest one hundredth of one percent -- x.xx%.)

a. What is the 1-year interest rate that is expected for Year 2?

b. If the real risk-free rate is 2% and the maturity risk premium is zero, what inflation rate is expected during Year 2?

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