Question
Are these the Determinants of Market Interest Rates? Used for bonds. Please let me know if I'm missing something! Also if each could be elaborated
Are these theDeterminants of Market Interest Rates? Used for bonds. Please let me know if I'm missing something! Also if each could be elaborated on so I know I understand correctly. Thank you
r* = Real Rate of Return: Rate of Return minus inflation premium
IP = Inflation Premium
DRP = Default Risk Premium
LP = Liquidity Premium: Charged when an asset cannot be immediately sold without loss
MRP: Market Risk Premium, which includes reinvestment risk and ?
rRF = Risk Free Rate: r* + IP
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Essentials of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
14th edition
324422709, 324422702, 978-0324422702
