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 7 percent next year, and increase to 8 percent the year after (Year 3).   According to the expectations theory, what should be the interest rate on 3-year, risk-free  securities today?