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(Figure: Expectations 0) In the figure, what is the cause of the movement from point a to b?
Yield %
The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or value.
Default Risk Premium
The additional yield that investors require to invest in bonds that have a risk of default, compared to risk-free bonds.
Liquidity Risk Premium
The extra yield or return that investors demand for holding a security that may not be easily sold or converted into cash without a significant loss in value.
Maturity Risk Premium
The additional yield demanded by investors as compensation for the increased risk of holding a bond as it approaches its maturity date.
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