3

3. (10pt) Suppose that people in France decide to permanently increase their savings rate. Predict what will happen to the French bond market in the future. Please answer the question by drawing the appropriate supply-and-demand diagram. 4. (30pt) A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund and the third is a money market fund that provides a safe return of 8 The