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 This is the rate for a riskless security that is exposed to changes in inflation. This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profile-that is, the same maturity and marketability. This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time. This is the rate on short-term US Treasury securities, assuming there is no inflation. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value. Component Symbol Grade It Now Save & Continue Continue without saving ristic e rate for a riskless security that is exposed to changes in inflation. me difference between the interest rate on a US Treasury bond and a corporate the same profile--that is, the same maturity and marketability. Che premium added to the real risk-free rate to compensate for a decrease in sing power over time. the rate on short-term US Treasury securities, assuming there is no inflation. the premium that reflects the risk associated with changes in interest rates for a term security. premium is added when a security lacks marketability, because it cannot be bought sold quickly without losing value. Component Inflation premium Nominal risk-free rate Liquidity risk premium Maturity risk premium Default risk premium Real risk-free rate Symbol Grade It Now Save & Continue Continue without saving ociated with each characteristic: e as unows. Identify the components (determinants) and the symbols Characteristic This is the rate for a riskless security that is exposed to changes in inflation. This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profile-that is, the same maturity and marketability. This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time. This is the rate on short-term US Treasury securities, assuming there is no inflation. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value. Component Symbol Grade It Now DRP LP IP TAP MRP Save & Continue Continue without saving