Business, 26.06.2020 20:01 FavvBella84
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.
A) This is the rate for a short-term riskless security when inflation is expected to be zero.
B) This is the rate on a Treasury bill or a Treasury bond.
C) This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value.
D) Over the past several years, Germany, Japan, and Switzerland have had lower interest rates than the United States due to lower values of this premium.
E) This is the premium added as a compensation for the risk that an investor will not get paid in full.
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