xIt 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 is the rate for a riskless security that is exposed to changes in inflation.Nominal risk$-$free rate $$rRF $$This is the difference between the interest rate on a US Treasury bond and a corporate bond of the same profile$$that is$,$ the same maturity and marketability.$$This is the premium added to the equilibrium interest rate on a security that cannot be bought or sold quickly enough to prevent or minimize loss.Liquidity risk premium $$LP $$This is the premium added to the real risk$-$free rate to compensate for a decrease in purchasing power over time.Inflation premium $$IP $$As interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this uncertainty.