7. 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 premium that reflects the risk associated with changes in interest rates for a long-term security.
This is the premium added to the risk-free rate that reflects the average sustained increase in the general level of prices for goods and services expected over the securitys entire life.
It is based on the bonds rating; the higher the rating, the lower the premium added, thus lowering the interest rate.
This is the rate for a short-term riskless security when inflation is expected to be zero.
This is the premium added to the equilibrium interest rate on a security that cannot be bought or sold quickly enough to prevent or minimize loss.
It is calculated by adding the inflation premium to r*.