Component Options-

1. Nominal risk-free rate

2. Maturity risk-premium

?3. Real risk-free rate

4. Inflation premium

?5. Default risk premium

?6. Liquidity risk premium

Symbol options-

r*, LP, rRF, DRP, IP, MRP

Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) and the symbols associated with each characteristic: It changes over time, depending on the expected rate of return on product assets exchanged among market participants and people's time preferences for consumption. That 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 security's entire life. 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. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. This is the difference between the interest rate on a U.S. Treasury bond and a corporate bond of the same profile-that is, the same maturity and marketability. It is calculated by adding the inflation premium to r*