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Please Answer the following with symbols. Multiple Choices: 1.)Liquidity Risk Premium 2.) Nominal Risk Free Rate 3.)Real Risk Free Rate 4.)Inflation Rate 5.)Default Risk Premium
Please Answer the following with symbols.
Multiple Choices:
1.)Liquidity Risk Premium
2.) Nominal Risk Free Rate
3.)Real Risk Free Rate
4.)Inflation Rate
5.)Default Risk Premium
6.) Maturity Risk Premium
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 quidity risk premium Symbol 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 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 uncertainty This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time. 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 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 This is the rate on a Treasury bill or a Treasury bond as a compensation for thisStep by Step Solution
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