The risk premium you receive as a saver is based:
A)on your credit rating.
B)on the amount of money you are borrowing.
C)only on the uncertainty associated with getting your money back.
D)only on the expected rate of inflation.
E)in part on the uncertainty associated with getting your money back and the expected rate of inflation.

Question

Quizplus · Accepted Answer

The risk premium for savers is influenced by both the uncertainty of getting their money back (credit risk) and the expected rate of inflation. The uncertainty increases the risk premium as savers demand higher returns for higher risk, and inflation expectations are factored in because savers want to ensure their returns outpace inflation to maintain purchasing power.

The Risk Premium You Receive as a Saver Is Based