The document discusses various determinants of interest rates, including the real risk-free rate which is the risk-free rate plus inflation premium, the nominal risk-free rate which includes a premium against the risk of default on payments, the default risk premium which covers the risk of a borrower failing to make interest or principal payments, the liquidity risk premium which covers the difficulty of selling less marketable securities, and the maturity risk premium which covers the risk of interest rates changing for bonds with longer maturities.

1. {
Determinant of interest
rate
Kanchan kandel

2.  The rate of return than a risk-free
investment offers under the conditions of
inflation
 i.e. zero risk. So a opportunity cost for
sacrificing current consumption
The Real Risk Free Rate

3.  The risk free rate plus inflation premium
The Nominal Risk-Free
Rate

4.  The premium against risk of default on
payment of interest and repayment of
principal
 Fails to pay contractual interest payment
and repayment of principal at maturity
Default Risk Premium

5.  The premium against lower marketability
of securities
 The risk arises from the difficulties of
selling the security
Liquidity Risk Premium

6.  The premium against longer maturity of
the security
 The potential for interest rates to change
while your money is tied up in a bond
until it matures
Maturity Risk Premium

7. Thank you