Interest rates are among the most important variables in the economy; explaining how they are determined is an important part of courses on financial markets and institutions. The readings for Part 2 provide examples for discussing interest rate determination, interest rate risk, indexed bonds, and the term structure of interest rates.

1. Chapter 3:
   "Investment Improvement: Adding Duration to the Toolbox." Michelle Clark Neely. Federal Reserve Bank of St. Louis The Regional Economist, April 1996, 10-11.
2. Chapter 4:
   "Why Are TIIS Yields So High? The Case of the Missing Inflation-Risk Premium." Ben Craig, Federal Reserve Bank of Cleveland Economic Commentary, March 15, 2003, pp. 1-4.
3. Chapter 5:
   "Interest Rates, Yield Curves, and the Monetary Regime." Joseph G. Haubrich, Federal Reserve Bank of Cleveland Economic Commentary, June 2004, pp. 1-4.
4. Chapter 6:
   "Stock Market Volatility." John Krainer, Federal Reserve Bank of San Francisco FRBSF Economic Letter, No. 2002-32, October 25, 2002, pp. 1-2.