The inflation premium is equal to the average expected inflation rate over the life of the security. Default means that a borrower will not make scheduled interest or principal payments, and it affects the market interest rate on a bond. The 25) the bond's risk of default, the higher the market rate. The average default risk premium varies over time, and it tends to get 26) when the economy is weaker and borrowers are more likely to have a hard time paying off their debts