2. Determinants of market interest rates Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) and the symbols associated with each characteristic: Characteristic It is calculated by adding the inflation premium to r*. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time. This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value. This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profilethat is, the same maturity and marketability. This is the rate for a short-term riskless security when inflation is expected to be zero. Component Symbol