The COMPONENT pull down answers are the same for all of the questions and the same for the SYMBOLS pull down answers

Aa Aa EL 3. Determinants of market interest rates Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) and the symbols associated with each characteristic: Component Characteristic Symbol It changes over time, depending on the expected rate of return Default risk premium on productive assets exchanged among market participants Liquidity risk premium and people's time preferences for consumption Inflation premium This premium is added when a security lacks marketability Nominal risk-free rate because it cannot be bought and sold quickly without losing Real risk-free rate value. Maturity risk premium This is the rate on a Treasury bill or a Treasury bond. It is based on the bond's rating; the higher the rating, the lower the premium added, thus lowering the interest rate. Over the past several years, Germany, Japan, and Switzerland have had lower interest rates than the United States due to lower values of this premium As interest rates rise, bond prices fa and as interest rates fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this uncertainty