Suppose That the Current One-Year Rate (One-Year Spot Rate) and Expected

Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3 and 4, respectively) are as follows: ₁R₁ = 5 percent, E(₂r₁) = 7 percent, E(₃r₁) = 7.5 percent E(₄r₁) = 7.85 percent
Using the unbiased expectations theory, calculate the current (long-term) rates for one-year and two-year -maturity Treasury securities.

A) One-year: 5.00 percent; Two-year: 5.50 percent
B) One-year: 5.00 percent; Two-year: 6.00 percent
C) One-year: 5.50 percent; Two-year: 6.15 percent
D) One-year: 5.50 percent; Two-year: 5.75 percent