Assume newly issued 30-year-on-the-run bonds sell at lower yields (higher prices) than 29 ½ year bonds with a nearly identical duration. A hedge fund that buys 29 ½ year bonds and sells 30 year bonds is taking a ______.  Group of answer choices   market neutral position conservative position bullish position bearish position none of the above

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.