Some characteristics of the determinants of nominal interest rates are listed as follows.
Identify the components (determinants) and the symbols associated with each characteristic:
a. This is the rate on short-term U. S. Treasury securities, assuming there is no inflation.
b. This is the premium that reflects the risk associated with changes in interest rates for a long-term security.
c. This is the premium added as a compensation for the risk that an investor will not get paid in full.
d. This is the rate for a riskless security that is exposed to changes in inflation.
e. 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.
f. 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.
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Some characteristics of the determinants of nominal interest rates are listed as follows.
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