a) What are loanable funds ? Who might be providers of loanable funds ?

b) Develop a model, using loanable funds to show the determination of interest rates

c) Predict what will happen if any factor affecting this market changes. Give several examples.

d) Explain the connection between : market for bonds; and market for flow of funds. Give an example of a change, and show the effects on the two simultaneous markets.

1. What is meant by term structure of interest rates ?
2. Relate this to the yield curve, and explain the different shapes of the yield curve.
3. Use current Treasury securities yields to demonstrate the yield curve for Treasurys.
4. Explain the differentials on yields (for different debt instruments).

Include a discussion (and model) of the premiums for any required rate of return.