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Which of the Following Comprise the Nominal Interest Rate on Default-Free

question 9

Multiple Choice

Which of the following comprise the nominal interest rate on default-free securities according to the modern view of the term structure of interest rates?
I. liquidity premium
II. real rate
III. interest rate risk premium
IV. inflation premium


Definitions:

Organic Compound

A compound consisting of a backbone made up of carbon atoms.

Inorganic Compound

A simple substance that does not contain a carbon backbone.

Carbon

Carbon is a chemical element with symbol C and atomic number 6, essential to life on Earth, forming a vast number of compounds including fossil fuels and DNA.

Valence Electrons

The electrons in the outer electron shell, known as the valence shell, of an atom; in the formation of a chemical bond, an atom can accept electrons into its valence shell or donate or share valence electrons.

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