Which of the four interest rate components had the greatest average annual percentage increase in the period from 1950-1999?
A)Real rate
B)Inflation premium
C)Historical interest rates
D)Default premium

Question

Quizplus · Accepted Answer

The inflation premium had the greatest average annual percentage increase in the period from 1950-1999. This is because the economy experienced periods of high inflation during this time, which increased the expected inflation rate and thus the inflation premium. The other components (real rate, historical interest rates, and default premium) did not have as significant of increases during this time period.

Which of the Four Interest Rate Components Had the Greatest