Which of the following has the greatest sensitivity to the changes in interest rate (i.e. greatest duration)? The yield curve is at at 10%. A) Zero coupon bond with 10 year maturity OB) Perpetuity with $100 annual payments C) Coupon bond with 10 year maturity, 10% coupon rate, face value of $1,000 OD) Annuity with 10 year maturity and $100 annual payment E) can not determine (need other information) If the economy were going into a recession, an attractive industry to invest in would be the industry. A) automobile B) medical services C) food producers OD) A and C O E B and C Consider $1,000 par value zero-coupon bonds (ignore liquidity premiums). One-, two-, three-, four-, and five-year maturity zero coupon bonds have yields to maturity of 6%, 7.5%, 7.99%, 8.49%, and 10.70%, respectively. What is the expected 3-year interest rate 2 years from now (after annualization)? OA) 9.55% OB) 12.89% OC) 14.89% OD) 13.73% E) can not determine (need other information) Question 11 4 pts If the forward rates for the upcoming 4 years are f_1 = 2%; f_2 = 10%;f_3 = 8% and f_4 = 7%, how would the yield curve look? A) downward sloping B) upward sloping OC) flat OD) hump-shaped E) can not determine (need other information)