12. (5 points)Circle all of the statements that are correct? Hint: There are more than three answers. a. Duration is constant at all interest rate levels. b. Generally the longer the maturity the longer the duration c. With regard to immunization and bonds, typically we do this to avoid the consequences of mal-ware. d. Bonds selling for a premium typically have higher durations than bonds selling for a discount. e. The maximum price for a 10-year, 10% coupon bond would be $2000. Duration is the first derivative for the price of a bond, given a change in interest rates. 8. Convexity measures the opaqueness of a pair of glasses, i.e. the ability to transmit light. h. The duration of a zero-coupon bond is always greater than the maturity. i. Immunizing for interest rate risk means that you set the duration equal to the investment horizon. j. Zero coupon bond are not good choices for individuals as the IRS requires ordinary income taxes on imputed income. k. A price of coupon bond equals the present value of principal repayment and the present value of an annuity 13. (5 points) If you believed interest rates were going to increase, what type of bond would you select? Circle the appropriate choice. High or low coupon? Short or long maturity? Premium or discount? High or low duration