Logo
Home Study Material Contact Search
AI Chat FREE
  1. mathematics
  2. algebra
  3. 7 determinants of market interest rates some chara

7 Determinants of market interest rates Some characteristics of the determinants of nominal interest rates...

80.2K

Verified Solution

Question

Algebra

image

7 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 This is the premium added to the risk free rate that reflects the average sustained increase in the general level of prices for goods and services expected over the security s entire life 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 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 as a compensation for this uncertainty 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 It is calculated by adding the inflation premium to r It is based on the bond s rating the higher the rating the lower the premium added thus lowering the interest rate Component Symbol

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

What is the need for a special area of law for administrative agencies? Why would the...

Electrical Engineering
1.2K views

Implement the synchronous 2-bit Up/Down counter  with saturation at the end states. The flip-flop outputs Q1, Q0...

Calculus
1.2K views

Differentiate d dx 6 f x x x x 4 x x x

Algebra
1.2K views

Express the given product as a sum containing only sines or cosines 170 sin sin...

Accounting
1.2K views

Where on Form 4797 will a taxpayer who sold...

Accounting
1.2K views

Answer these 4 questions in detail based on the Tracking Manufacturing Costs on a Continuous...

Accounting
1.2K views

The roles and responsibilities of ICAB, ICAC, IFAC what do they do? Roles play in...

Accounting
1.2K views

Required information [The following information applies to the questions displayed below.) "We really need to...

Accounting
1.2K views

Scenario: 1 Apples dominance in the Tablet market is so established now that rivals are...

Finance
1.2K views

Supongamos que una empresa de bebidas est considerando agregar una nueva lnea de productos. ...

Finance
1.2K views

For the following situation, explain how RMM should be assessed and what effect that assessment...

Finance
1.2K views

Question 91 pts The beta of Ricci Co.'s stock is 4.2, whereas the risk-free rate...