1) Western Bank pays 5% compounding interest on its savings account balances, whereas Eastern Bank pays 5.5% simple interest. If you deposited $8,000 in each bank, you will earn more from the Western Bank account at the beginning of the fifth year.

True

False

2) All else held constant, the bond price will decrease if you decrease the coupon rate.

True

False

3) All else held constant, the bond with a higher price must have a lower yield to maturity (YTM) than the bond with a lower price.

True

False