If interest rates decline sharply, which of the following bonds is likely to appreciate the most?
A) 15-year 8% bond trading on an 8.10 basis.
B) 15-year 7% bond trading at par.
C) 15-year zero coupon bond trading on a 7.60 basis.
D) 15-year 8% bond trading on a 7.90 basis.
Answer: C) 15-year zero coupon bond trading on a 7.60 basis.