1. Which of the following bonds has the longest duration?

Bond	Time to Maturity	Coupon Rate	Yield to Maturity
A	8	7%	5%
B	8	5%	5%
C	12	5%	4%
D	12	5%	3%

1. Bond A
2. Bond B
3. Bond C
4. Bond D

2. If you forecast the interest rate to fall sharply soon and you want to take advantage of the falling interest rate. Which of the following bonds should you buy now in order to earn the highest profit?

1. Bond with duration of 5 years.
2. Bond with duration of 6 years.
3. Bond with duration of 7 years.
4. Bond with duration of 8 years.