A stock is a share in the ownership, equity, of a company. A bond is a debt that the company must pay back. All of the above are correct. The equilibrium point is E1. The equilibrium interest rate is 6%, and the equilibrium loanable funds is $50 billions. For each of the following pairs, which bond would you expect to pay a higher interest rate? Explain. a. a bond of the U.S. government or a bond of an Eastern European government b. a bond that repays the principal in year 2020 or a bond that repays the principal in year 2040 c. a bond from Coca-Cola or a bond from a software company you run in your garage d. a bond issued by the federal government or a bond issued by New York State Best Answer: a. The US bond, because there is much more confidence in the ability of the US government to honour its debt commitments. b. the bond that matures (repays) in 2030, because you need to pay a higher interest rate in order to justify holding someones money for a longer period of time.