Assume that the current interest rate on a one-year bond is 8 percent, the current rate on a two-year bond is 10 percent, and the current rate on a three-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the one-year interest rate expected during Year 3? (Base your answer on an arithmetic average rather than a geometric average.)
A. 12%
B. 16%
C. 13%
D. 10%
E. 14%
Answer: B
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Empty space on a page is called ________ space, which can improve readability
Fill in the blank(s) with correct word