(5 points] Generally speaking only the most credit worthy companies can borrow funds by issuing bonds in the capital market. Other rms may need instead to borrow from banks. Suppose that in the bonds market, an equilibrium is established at bond price of P* and interest rate of 1*. The diagram below shows the loan market at banks and is an unconventional representation of such a market. Use the concept of adverse selection to draw supply and demand curves for loans that show whether the interest rate in the loan market should be higher than, equal to, or lower than i*, the interest rate on bonds. Explain your choice. 1 Quantity of Bank Loans