Suppose 2-year Treasury bonds yield 5%, while 1-year bonds yield 3%. r* is 1.5%, and the maturity risk premium is zero. Negative expected inflation rates, if any, should be indicated by a minus sign.

A. Using the expectations theory, what is the yield on a 1-year bond, 1 year from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places. %

B) What is the expected inflation rate in Year 1? Do not round intermediate calculations. Round your answer to two decimal places. %

C. What is the expected inflation rate in Year 2? Do not round intermediate calculations. Round your answer to two decimal places. %