The demand curve and supply curve for bonds can be estimated using the following equations. The demand curve is P=-2/5*Q+940, while the supply curve is P=Q+500, where P is the price of the bond and Q is the quantity of the bond.

a. What is the equilibrium price and quantity of bonds in this market?

b. Given your answer to part (a), which is the expected interest rate in this market? Assume that this bond is a one-year discount bond with a $1000 face value. Hint: For any one-year discount bond, =(f-p)/p.

c. At the price of $900, do we have an excess supply or demand? What is the exact amount of the excess supply or demand?

d. Suppose the demand curve shifts to P=-2/5*Q+990 and the supply curve shifts to P=Q+10. Does the demand curve shift to the left or right? Does the supply curve shift to the left or right? Does the price increase or decrease? Why?