Question: This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profile that is , the

This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profilethat is, the same maturity and marketability.This is the premium that reflects the risk associated with changes in interest rates for a long-term security.This is the rate on a Treasury bill or a Treasury bond.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 securitys entire life.This is the rate for a short-term riskless security when inflation is expected to be zero.It is based on the bonds marketability and trading frequency; the less frequently the security is traded, the higher the premium added, thus increasing the interest rate.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!