This is a reflective journal question... this is what i have written so far:The difference in the interest rate is caused by the fact that there is a different level of risk in the sovereign bonds?????and the exchange rate.????????????????????? Since my uncle is in his retirement,he should look to invest in somewhere where there is higher security and lower risk.IF he resides in one of the European Union?????????????????????????????? countries, i would suggest him to.....

Not sure if i am going the right way please help :)

Your uncle has recently retired with two million dollars of superannuation funds. He wants to invest a part of his super fund to fixed income securities, preferably foreign government bonds. He found Germany Government bonds offering YTM of 3% whereas Greece Government bonds offering YTM of 5%. He got confused with two different rates since both of them are risk-free government bonds. Explain your uncle the underlying cause of 2% differences in YTM between these two Government bonds. Assume your uncle is a risk-averse investor, offer him your valuable advice to invest one of these two securities