The additional premium added to the real interest rate by lenders to compensate them for a debt instrument which cannot be converted to cash quickly at its existing value is called a(n):

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The liquidity premium is added to the real interest rate to account for the fact that a debt instrument cannot be converted to cash quickly without some loss in value. This is because it may be difficult to find a buyer willing to pay the instrument's existing market value, especially in times of economic uncertainty. The inflation premium is a premium added to the real interest rate to compensate lenders for expected inflation. The default risk premium is added to the real interest rate to compensate for the risk of the borrower defaulting on the loan. The maturity premium is added to the real interest rate to compensate for the risk associated with long-term bonds that may be subject to interest rate changes.

The Additional Premium Added to the Real Interest Rate by Lenders