Interest rate risk premium
What is Interest rate risk premium? Briefly explain it.
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Interest rate risk premium: It is the third, and last, component of the term structure has to do with interest rate risk. Longer-term bonds contain much higher risk of loss resultant from modifications in interest rates than do shorter-term bonds. Investors identify this risk, and they demand extra compensation in the form of maximum rates for bearing it. This extra compensation is termed as the interest rate risk premium. The longer the term to maturity, the bigger is the interest rate risk; therefore the interest rate risk premium rises with maturity.
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Different forms of capital account transactions: A) Private Transactions: There are transactions which affect the liabilities and assets of individuals. Discover Q & A Leading Solution Library Avail More Than 1438065 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1958345 Asked 3,689 Active Tutors 1438065 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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