Problem:
Currently 10 year U.S. government Treasury Bills yield 1.82%. 10 year German government securities yield .38%, 10 year French government securities yield .57%, and 10 year Greek government securities yield 9.23%.
Assume you are working for a pension fund and your employer directs you to invest $10 million into only one of these government securities that your organization plans to hold to maturity.
Required:
Question1. Which one would you invest in and explain why?
Question2. Discuss your interpretation of all of the variables: Rd R* IP rRF DRP LP MRP for each security in regards to this question. Do not just give the definitions; explain how they apply in this situation.
Please describe in detail and provide step by step solution.