Why might you choose to make the investment in the $1-$year security that pays an interest rate of only $5\mathrm{.}9\%,$ as opposed to investing in the $2-$year security paying $8\mathrm{.}4\%?$ Provide numerical support for your answer. Which theory of term structure have you supported in your$$ answer?

If you choose the $2-$year $$security$,$ the value of your savings after the second year will be $$$

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enter your response here. $($Round to the nearest$$ dollar.$)$

Part $2$

If you choose to invest in the $1-$year $$security$,$ the value of your savings after the first year will be $$$

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enter your response here. $($Round to the nearest$$ dollar.$)$

Part $3$

How much interest must the $1-$year security earn after its renewal in the second year in order for your account to equal the $2-$year $$investment$?$

To do as well as you would with the first$$ choice, during the second year the $1-$year security would have to earn $$$

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enter your response here. $($Round to the nearest$$ dollar.$)$

Part $4$

In order for the investment in the $1-$year security to equal the $2-$year $$investment$,$ how much should the renewal rate on the $1-$year security$$ be$?$

The required interest rate during the second year is

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enter your response here$\%.$