$**$Ignore my answers$**$ 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

It changes over time, depending on the expected rate of return on productive assets

exchanged among market participants and people's time preferences for consumption.

This is the rate on a Government of Canada T$-$bill or a government bond.

This 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$\text{'}$s

entire life.

It is based on the bond's rating; the higher the rating, the lower the premium added, thus

lowering the interest rate.

This premium is added when a security lacks marketability, because it cannot be bought

and sold quickly without losing value.

This is the premium that reflects the risk associated with changes in interest rates for a

long$-$term security.

Component

Real risk$-$free rate

Real risk$-$free rate

Inflation premium

Default risk premium

Liquidity premium

Inflation premium

Symbol