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please answer the missing blanks 7. Determinants of market interest rates Some characteristics of the determinants of nominal interest rates are listed as follows. Identify
please answer the missing blanks
7. Determinants of market interest rates Some characteristics of the determinants of nominal interest rates are listed as follows. Identify associated with each characteristic: Characteristic This is the premium added as a compensation for the risk that an investor will not get paid in full. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. 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. 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 calculated by adding the inflation premium to r". Maturity risk premium Inflation premium Default risk premium Liquidity risk premium. Nominal risk-free rate Real risk-free rate Liquidity risk premium nants) and the symbols Symbol kkkkk 7. Determinants of market interest rates Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) an associated with each characteristic: LP Characteristic This is the premium added as a compensation for the risk that an investor will not get paid in full. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. 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. 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 calculated by adding the inflation premium to r". Component Liquidity risk premium Maturity risk premium Liquidity risk premium MRP DRP r IP TRF E mbols Step by Step Solution
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