Please print test paper MAT137 Final Exam (Spring 2021).pdf …

Please print test paper MAT137 Final Exam (Spring 2021).pdf   You may neatly copy and show all work on paper if you don’t have access to a printer. Final exam must be completed in one sitting. You only have 1 attempt to complete this exam. Please scan and upload exam paper using link provided below. 

The real risk-free rate of interest is 1 percent.  Inflation…

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 2-year, risk-free  securities today?