What is the shape of the yield curve given in the following term structure? What expectations are investors likely to have about future interest rates? 1 year 2 years Term Rate (%) 3 years 2.74 5 years 3.33 7 years 3.76 10 years 4.15 20 years 4.96 2.02 2.43 What is the shape of the yield curve given the term structure? (Select the best choice below.) O A. The yield curve is an inverted yield curve (decreasing). B. The yield curve is a flat yield curve. O C. The yield curve is a normal yield curve (increasing). OD. It is hard to tell because we are not given an EAR for every year. What expectations are investors likely to have about future interest rates? (Select the best choice below.) A. Interest rates might rise in the future. B. The yield curve provides no clues as to future interest rate levels. O C. Interest rates might decrease in the future. OD. Interest rates will likely stay the same in the future. You are the CFO of a firm. You are evaluating a potential project for investment, which is similar to other projects that the firm undertakes. The project will cost $1 million in initial outlay. The firm has $1 million in cash available for investment, which is currently in a bank account earning 2% interest. What is the appropriate discount rate (cost of capital) to use in evaluating the project? (Choose the correct response.) A. Since the firm already has the cash and doesn't need to raise it from external sources, the opportunity cost of capital is zero. B. The opportunity cost of capital is the best rate of return currently available from the potential projects that the firm currently has to choose from. C. Since the firm will lose 2% in interest if it uses the cash, the opportunity cost of capital is 2%. D. The opportunity cost of capital is the required rate of return for investors to invest in the firm