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In Chapter 1 of Quantitative Investment Analysis, the authors of our textbook explain that we can view an interest rate as composed of a risk-free

  1. In Chapter 1 of Quantitative Investment Analysis, the authors of our textbook explain that we can view an interest rate as composed of a risk-free interest rate plus a collection of compensatory premiums. Which one of these premiums is likely increasing under our current economic circumstances? If this premium increase causes interest rates to continue rising over the next year, what will happen to the present value of all assets that provide future cashflows?

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