Question: TQuestion B5 (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

TQuestion B5 (a) Identify ONE factor that affect demand and supply

TQuestion B5 (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) 1 2 3 4 Rates 4.75% 5.00% 5.30% 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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