Question: 1) Explain why interest rates can be volatile but also stable? 2) Explain whether the yield curve provides a reasonable forecast of future interest rates

1) Explain why interest rates can be volatile but also stable?

2) Explain whether the yield curve provides a reasonable forecast of future interest rates and what are the constraints of the yield curve.

5) Explain how the bond market facilitates a government's fiscal policy, and corporations raising funds. How do you think the bond market could discipline a government and discourage the government from borrowing (and spending) excessively? Also how could the bond market not be attractive for corporate borrowings?

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