happen to the supply of funds available in the capital markets? And what will be the effect on interest rates? 7. Explain the monetary policy tools that the Fed could use if it wishes to expand the money supply. Which of the policy tools has the most predictable effects? Explain and be specific 8. One-hundred-sixty-day commercial paper can be bought at a 3.05 percent discount. What are the BEY and the EAR on the commercial paper? Why do these rates differ? 9. A bondholder purchased a 10 percent coupon, $1,000 par three-year bond at a 10 percent yield. Interest rates then immediately fell to 8 percent and his bond was called at a price of $1,100. He reinvested his money and earned 8 percent on the $1,100 for three years. Did the call help or hurt the bondholder? What was his three-year rate of return on his original investment