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 Component Symbol This is the rate for a riskless security that is exposed to changes in inflation. This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value. As interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this uncertainty. This is the premium added as a compensation for the risk that an investor will not get paid in full. This is the rate on short-term US Treasury securities, assuming there is no inflation. This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time