J 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 rate for a riskless security that is exposed to changes in inflation. 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. 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. This is the rate for a short-term riskless security when inflation is expected to be zero. This is the premium added as a compensation for the risk that an investor will not get paid in full. 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. Component Symbol Grade It Now Save & Continue Continue without saving
J 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 rate for a riskless security that is exposed to changes in inflation. 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. 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. This is the rate for a short-term riskless security when inflation is expected to be zero. This is the premium added as a compensation for the risk that an investor will not get paid in full. 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. Component Symbol Grade It Now Save & Continue Continue without saving
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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