In the context of bonds, there are multiple components of the required rate of return. Which...

In the context of bonds, there are multiple components of the required rate of return. Which of the following BEST describes the components of the required rate of return? Select one: a. Premiums for interest rate risk, default risk, and liquidity risk b. Real rate of return and a premiums for inflation risk, interest rate risk, default risk, and liquidity risk c. Real rate of return and a premium for inflation

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Expert Solution

Correct option is > b. Real rate of return and a premiums for inflation risk, interest rate risk, default risk, and liquidity risk

Real rate of return is base and then all premiums and risk components are added to required rate of return

jeff jeffy answered 1 year ago

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