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Keep shoppingInterest Rates Explained: Bond Yields & Market Forces
33 students
Interest Rates Explained: Bond Yields & Market Forces
Learn interest rates: loanable funds, bond yields, Fisher effect & drivers of borrowing and lending costs
Created byEric Kang
Last updated 6/2026
English
English
What you'll learn
- Understand how interest rates are determined in financial markets through the supply and demand for loanable funds.
- Develop a clear understanding of how interest rates affect borrowing, lending, and bond yields in financial markets.
- Explain key concepts such as the Fisher effect and how inflation expectations influence real and nominal interest rates.
- Apply interest rate concepts to interpret bond yields, loan pricing, and real-world financial and economic decisions.
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Course content
2 sections • 6 lectures • 2h 6m total length
Requirements
- No prior finance or economics background is required; this course is designed for beginners.
- Basic familiarity with general learning or academic content is helpful but not necessary.
- A computer with internet access to follow lectures and examples.
Description
This module forms part of the full course “Global Financial Markets 2026: The Definitive Guide.” It is designed to provide learners with a clear, structured, and intuitive understanding of interest rates and their central role in financial markets. Within the broader masterclass, this module connects interest rate theory to bond pricing, credit markets, and macroeconomic financial decision-making.
Interest rates are one of the most important variables in finance, influencing borrowing, lending, investment decisions, and asset pricing across the global economy. In this module, you will learn how interest rates are determined through the supply and demand for loanable funds, providing a clear economic framework for understanding credit markets.
We then explore how bond yields are formed and why different debt instruments offer different returns. You will examine how factors such as credit risk, liquidity conditions, taxation, and maturity structure influence yield levels, and how investors assess risk when pricing debt securities.
A key part of the module is the Fisher effect, which explains the relationship between inflation expectations and nominal interest rates. This helps you understand how lenders and borrowers account for changes in purchasing power over time.
You will also learn how risk-free benchmark rates, such as government bond yields, are adjusted to reflect real-world conditions, forming the basis for pricing a wide range of financial instruments.
By the end of this module, you will be able to interpret interest rate movements, understand bond yield behaviour, and analyse how interest rates influence financial markets, lending decisions, and broader economic activity.
Students are encouraged to continue with Financial Markets 2026: The Complete Masterclass, where these concepts are integrated into a unified framework of global financial systems.
Who this course is for:
- Beginner learners who want to understand how interest rates work in a clear and structured way.
- Intermediate learners who already have some exposure to finance and want a stronger understanding of bond markets and interest rate theory.
- Advanced learners, students, and professionals who want a system-level understanding of interest rates and their role in financial markets and the economy.