The __________ component of the term structure does not influence the shape of the term structure, rather it affects the overall level of interest rates.

Question

Quizplus · Accepted Answer

The real rate of interest is a fundamental component that affects the overall level of interest rates rather than the shape of the term structure. It represents the compensation investors demand for deferring consumption, without considering inflation or other types of risk.

The __________ Component of the Term Structure Does Not Influence