Question $10($Mandatory$)(1$ point$)$

Assume investors are indifferent among security maturities. Today, the annualized $2$ year interest rate is $12$ percent, and the $1-$year interest rate is $7$ percent. What is the forward rate $($expected $1-$year rate in $1$ year$)$ according to the pure expectations theory?

$1\mathrm{.}17\%$

$2\mathrm{.}41\%$

$5\mathrm{.}16\%$

$17\mathrm{.}23\%$