QUESTION 5 Consider two bonds that each have a par value of $1,000, pay coupons semi-annually, and have a maturity of 5 years. Bond A pays a coupon of 3% year, and bond B pays a coupon of 4.5% year. If the yield-to-maturity on all 5-year bonds is 4%, then which of the following is true? O a. The price of bond A is above $1,000, and the price of bond B is above $1,000. b. The price of bond A is above $1,000, and the price of bond B is below $1,000. c. The price of bond A is below $1,000, and the price of bond B is above $1,000. d. The price of bond A is below $1,000, and the price of bond B is below $1,000. QUESTION 6 Suppose the yield-to-maturity on all 5-year bonds is 4.00%. Now consider two bonds that each have a par value of $1,000, pay coupons semi-annually, and have a maturity of 5 years. Agree or disagree: if bond A pays a coupon of 3.75% year, and bond B pays a coupon of 4.25%/year then bond B offers a better expected return Agree Disagree QUESTION 7 Based on the slides from class, what entity is the primary source of supply of loanable funds? O a. Households b. Fimms O c. Government O d. Foreigners Oe. Banks