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{
Determinant of interest
rate
Kanchan kandel
 The rate of return than a risk-free
investment offers under the conditions of
inflation
 i.e. zero risk. So a opportuni...
 The risk free rate plus inflation premium
The Nominal Risk-Free
Rate
 The premium against risk of default on
payment of interest and repayment of
principal
 Fails to pay contractual interes...
 The premium against lower marketability
of securities
 The risk arises from the difficulties of
selling the security
Li...
 The premium against longer maturity of
the security
 The potential for interest rates to change
while your money is tie...
Thank you
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Determination on interest rate

  1. 1. { Determinant of interest rate Kanchan kandel
  2. 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. 3.  The risk free rate plus inflation premium The Nominal Risk-Free Rate
  4. 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. 5.  The premium against lower marketability of securities  The risk arises from the difficulties of selling the security Liquidity Risk Premium
  6. 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. 7. Thank you
  • shahalam190

    Mar. 29, 2019
  • Siva9456

    Apr. 17, 2018

Interest Rate Determination

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