Inflation premium
Describe the term Inflation premium and how it is the prospect of future inflation?
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Inflation premium: It is the prospect of future inflation, very strongly affects the shape of the term structure. Investors thinking regarding loaning money for different lengths of time recognize that future inflation erodes the value of dollars which will be returned. As an outcome, investors demand compensation for such loss in the form of maximum nominal rates. This extra compensation is termed as inflation premium.
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When the U.S. price elasticity of demand for gasoline is 1.0, the price elasticity of demand for gas sold through one of several gas stations along a busy highway: (w) less than 1.0. (x) 1.0. (y) greater than 1.0. (z) zero. Discover Q & A Leading Solution Library Avail More Than 1448842 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1937474 Asked 3,689 Active Tutors 1448842 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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