Risk is an important component of interest rates.Which of the following risks is NOT a determinant of interest rates?

Question

Quizplus · Accepted Answer

Institutional risks are not a direct determinant of interest rates. Interest rates are primarily influenced by default risks (the risk that the borrower will not make the required payments), interest rate risks (the risk of interest rates changing unfavorably), and marketability risks (the risk associated with the ease of selling the investment). Institutional risks, which pertain to the specific practices and stability of financial institutions, do not directly affect the general determination of interest rates.

Risk Is an Important Component of Interest Rates