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: This is the rate for a short-term riskless security when inflation is expected to be zero. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. It is based on the bond's marketability and trading frequency; the less frequently the security is traded, the higher the premium added, thus increasing the interest rate. It is based on the bond's rating; the higher the rating, the lower the premium added, thus lowering the interest rate. This is the rate for a riskless security that is exposed to changes in inflation. Over the past several years, Germany, Japan, and Switzerland have had lower interest rates than the United States due to lower values of this premium