Characteristic

Component

Symbol

It changes over time, depending on the expected rate of return on productive assets exchanged among market participants and people$$s time preferences for consumption.

This premium is added when a security lacks marketability, because it cannot be bought and sold quickly without losing value.

It is calculated by adding the inflation premium to r$*.$

This is the premium added to the risk$-$free rate that reflects the average sustained increase in the general level of prices for goods and services expected over the security$$s entire life.

This is the premium that reflects the risk associated with changes in interest rates for a long$-$term security.

This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profile$$that is$,$ the same maturity and marketability.