Find expert answers and community support for all your questions on IDNLearn.com. Get accurate answers to your questions from our community of experts who are always ready to provide timely and relevant solutions.

Suppose we observe the following rates: ₁R₁ = 5%, ₁R₂ = 7%. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(₂r₁)? (Do not round intermediate calculations. Round your final answer to the nearest whole percent.)