Question: 1. Show the Interst rate equation and explain all the risk premiums embedded in the equation 2. What is the Gibson paradox? 3. What is

1. Show the Interst rate equation and explain all the risk premiums embedded in the equation

2. What is the Gibson paradox?

3. What is the Fisher equation?

4. What is the relationship between these two concepts?

5. Use supply and demand curves in the bond markets to explain the dynamics of the

-Liquididty Effect,

-Income Effect, and

-Price Anticipation Effect

On Interest rates. Use graphs to explain the dynamics.

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