The interest rates that are observed in the economy differ from the nominal risk-free rate due to risk premiums.

Name: The interest rates that are observed in the economy differ from the nominal risk-free rate due to risk premiums.
Brand: Quizplus
Rating: 4.8 (43 reviews)

Question

Quizplus · Accepted Answer

Risk premiums are added on top of the nominal risk-free rate to account for the additional risk of a particular investment or loan. This results in observed interest rates that differ from the nominal risk-free rate.

The Interest Rates That Are Observed in the Economy Differ