Which of the following factors directly impact the level of interest rates?
A)risk
B)marketability
C)maturity
D)all of the above

Question

Quizplus · Accepted Answer

All three factors - risk, marketability, and maturity - have a direct impact on the level of interest rates. Higher risk generally leads to higher interest rates, as lenders demand compensation for taking on greater risk. Less marketable securities may also command higher interest rates, as buyers need added incentives to purchase securities with lower liquidity. Finally, longer maturity securities tend to have higher interest rates, as lenders require compensation for tying up their money for longer periods of time. Therefore, all three factors impact the level of interest rates.

Which of the Following Factors Directly Impact the Level of Interest