Term structure premium, an inflation of bond and bond default premium are included in_________________?
Correct answer: A. Risk factors
- A. Risk factors
- B. Premium factors
- C. Bond buying factors
- D. Multi model
Explanation
Term-structure, inflation, and bond-default premiums are risk-related components used in determining required returns on bonds. They represent compensation for different sources of bond risk.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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