Ah Lee's problem is to recommend the best investment among three different US Treasury bonds. The $10 million investment will be liquidated in three years to help repay a bank loan charging a fixed rate interest at 8.50% per year. The bonds, each with a $1,000 par value and annual convention, are described as following: Bond Annual Current Price Maturity (yrs) Coupon Bond 1 0 % $882.50 Bond 2 11.625% $1403.39 Bond 3 5.5% $1107.59 2. Risk and Return analysis (i) Analyse the durations of the 3 bonds and why does that matter in the analysis? Explain (20 Points) (Hint: You need to calculate the YTM of the 3 bonds in order to calculate the Duration). (ii) Perform RCY analysis on the 3 bonds (40 Points) (Hint: Make use of spot rates to calculate the corresponding forward rates for coupon reinvestment calculation.)