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Please help fill in the blanks. The options are the same for each question. Aa Aa 3. Determinants of market interest rates Some characteristics of
Please help fill in the blanks. The options are the same for each question.
Aa Aa 3. 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 Component Symbol It changes over time, depending on the expected rate of return on productive assets exchanged among market participants Real risk-free rate Inflation premium and people's time preferences for consumption Liquidity risk premium This is the rate for a riskless security that is exposed to Maturity risk premium changes in inflation. Nominal risk-free rate This is the premium added to the real risk-free rate to Default risk premium 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 premium that reflects the risk associated with changes in interest rates for a long-term security This is the premium added as a compensation for the risk that an investor will not get paid in fullStep by Step Solution
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