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Determinants of market interest rates Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components ( determinants ) and

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 rate for a short-term riskless security when inflation is expected to be zero.
This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time.
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.
As interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this q,
q,
q,
q, uncertainty:
This is the rate for a riskless security that is exposed to changes in inflation.
Maturity risk premium
MRP
It is based on the bond's marketability and trading frequency; the less frequently the
q,
q, security is traded, the higher the premium added, thus increasing the interest rate.
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