Examlex
These values are the combinations of a value and the probability of its occurrence.
Real Risk Free Rate
The rate of return on an investment with no risk of financial loss, after adjusting for inflation.
Inflation Premium
The additional interest rate that lenders charge borrowers to compensate for the loss of purchasing power due to inflation.
Short-Term Bond
A bond that matures in a short period, usually less than five years, making it less sensitive to interest rate changes compared to long-term bonds.
Default Risk Premium
The additional return that investors require to compensate them for the risk of default by the borrower.
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