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Please answer the multiple choice problems Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) and the
Please answer the multiple choice problems
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 on short-term U.S. Treasury securities, assuming there is no inflation. This is the rate for a riskless security that is exposed to changes in inflation. This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value This is the premium added as a compensation for the risk that ]- an investor will not get paid in ful. This is the premium that reflects the risk associated with changes in interest rates for a long-term security. Over the past several years, Germany, Japan, and Switzerland have had lower interest rates than the United States due to lower values of this premiumStep by Step Solution
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