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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This profit-maximizing pure competitor would close down within the short run when the price fell below the price resultant to: (i) point c. (ii) point d. (iii) point e. (iv) point f. (v) point g. Discover Q & A Leading Solution Library Avail More Than 1447154 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1926578 Asked 3,689 Active Tutors 1447154 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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