Three students have each saved 1000 Each has an investment o

Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students’ investment projects:

Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project.

Complete the following table with how much each student will have a year later when the project pays its return.

Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r.

A student would choose to be a borrower in this market if his or her expected rate of return is__________(GREATER OR LESS) than r.

Suppose the interest rate is 6 percent.

Among these three students, the quantity of loanable funds supplied would be $__________  and quantity demanded would be $___________.

Now suppose the interest rate is 12 percent.

Among these three students, the quantity of loanable funds supplied would be $___________ and quantity demanded would be $____________.

At an interest rate of _______% , the loanable funds market among these three students would be in equilibrium. At this interest rate,___________(simone,rajiv & simone,rajiv,kevin,kevin &rajiv)  would want to borrow, and ______________ (kevin,simone,kevin &rajiv,rajiv & simone,rajiv) would want to lend.

Suppose the interest rate is at the equilibrium rate.

Complete the following table with how much each student will have a year later after the investment projects pay their return and loans have been repaid.

True or False: Both borrowers and lenders are made better off.

Solution

Kevin=4% of 1000+1000=1040

Rajiv=1070

Simone=1150

Greater(only then he can make profits)

2000 and supplied will be 1000(Rajiv and simone can easily cover their expenses)

7%,

Simone

Kevin

Kevin=1070 (he gets 7% rate of interest on loans)

Rajiv=1070 (he earns 7%)

Simone=1150+1150-70=2230 (he earns 15% but will have cost of 7% on 1000 borrowed)

Simone

Trye as shown above

Was required to answer only 4 parts according to Chegg policy but still answered all 100% right answers Please please like answer