Question
(a) Identify ONE factor that affect demand and supply of loanable fund in the U.S. respectively under global widespread of COVID-19 and explain their corresponding
(a) Identify ONE factor that affect demand and supply of loanable fund in the U.S. respectively under global widespread of COVID-19 and explain their corresponding effect on interest rate in the U.S.. (6 marks)
(b) The following information shows the interest rates with different maturities observed today:
| Maturity (Years) | Rates |
| 1 | 4.75% |
| 2 | 5.00% |
| 3 | 5.30% |
| 4 | 5.65% |
Calculate (i) 1-year forward rate in year 2 and (i) 2-year forward rate in year 3 based on
Unbiased Expectation Theory.
(2 marks)
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
