Answer:
Hello attached below is a detailed solution to your question
A) attached below
B) attached below
C) Security A
Explanation:
A) calculate the term structure interest rates for maturities of 1 to 5 years for all 3 securities
we will use expectation hypothesis ;
B) Draw the yield curves for the 3 term securities of length 1 to 5 years
- (1+ yield(t))= ( 1 + rate(1) )* ......
C) The security to choose if you plan to have it mature in 3 years is SECURITY A this is because it has maximum yield