Which of the following is not a component of a bond's required rate of return?
A) risk premium
B) real rate of return
C) inflation premium
D) maturity payment

Question

Quizplus · Accepted Answer

The required rate of return for a bond includes the real rate of return (the minimum return an investor expects to earn to compensate for inflation), the inflation premium (the additional return an investor demands to cover the erosion of purchasing power caused by inflation), and the risk premium (the compensation an investor requires for taking on the risk of default or other factors). The maturity payment refers to the final payment the bondholder receives at maturity and is not a component of the required rate of return.

Which of the Following Is Not a Component of a Bond's