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Interest 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, PhD
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.
Explore related topics
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
A change in interest rates can raise borrowing costs, reduce bond prices, alter investment returns, and change economic behaviour. If you cannot explain why rates and yields move, you are missing a core mechanism of finance. This course helps you understand that mechanism clearly and practically.
This course gives you a clear, structured introduction to interest rates, bond yields, credit markets, inflation expectations, and financial market pricing.
Interest rates are among the most important variables in finance, influencing borrowing, lending, investment decisions, bond prices, asset valuations, and economic activity.
You will learn how interest rates are determined through the supply and demand for loanable funds, giving you a practical economic framework for understanding credit markets.
You will also explore how bond yields are formed and why different debt instruments offer different returns.
Key factors include:
Credit risk
Liquidity
Taxation
Maturity
Investor risk assessment
You will learn how these factors influence yield levels and how investors price debt securities.
A key part of the course covers the Fisher Effect, helping you understand the relationship between:
Inflation expectations
Nominal interest rates
Purchasing power over time
You will also examine risk-free benchmark rates, including government bond yields, and learn how real-world risk adjustments influence the pricing of financial instruments.
By the end of the course, you will be able to interpret interest rate movements, understand bond yield behaviour, and analyze how rates influence financial markets, lending decisions, investment activity, and the wider economy.
Don’t treat interest rates as just another economic statistic. Understand the forces behind rates and yields—and build the foundation you need to make sense of bonds, credit markets, and financial pricing.
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.