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

• A)I and II only
• B)II and III only
• C)III and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

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