Following Are the Yields on Selected Treasury Securities ?Using the Expectations Theory, Compute the Expected One-Year Interest Rate

Multiple Choice

Following are the yields on selected Treasury securities:
$\begin{array}{cc}\text { Maturity } & \text { Yield } \\\hline \text { 2 years } & 1.6 \% \\\text { 3 years } & 2.2 \\\text { 4 years } & 2.4\end{array}$
?Using the expectations theory, compute the expected one-year interest rate in Year 3. That is, compute the rate that is expected to exist only during Year 3. (Base your answer on an arithmetic average rather than a geometric average.)

A) 2.2%
B) 1.6%
C) 3.4%
D) 1.9%
E) 3.0%