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Business, 22.02.2020 02:05 alisonlebron15

Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) and the symbols associated with each characteristic: 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. This is the rate on a Treasury bill or a Treasury bond. __ This is the premium added to the real risk-free rate to compensate for a decrease in __ purchasing power over time. This is the difference between the interest rate on a U. S. Treasury bond and a corporate __ bond of the same profile-that is, the same maturity and marketability. 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. 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.

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