| Charactaristic | Companents | Symbol |
| It changes over time, depending on the expected rate of return Real risk—free rate J on productive assets exchanged among market participants and people’s time preferences for consumption. |
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| This is the rate for a riskiess security that is exposed to changes in inflation. | ||
| This is a premium added to the real risk free rate to compensate for a decreased in purchasing power over time | ||
| This is the premium added to the equilibrium interest rate on a Liquidity risk premium V security that cannot be bought or sold quickly enough to prevent or minimize loss. | ||
| This is the premium that reflects the risk associated with changes in interest rates for a long term securit | ||
| This is a premium added to the real risk free rate to compensate for the risk that investor will not get paid in full |
| Charactaristic | Companents | Symbol |
| It changes over time, depending on the expected rate of return Real risk—free rate J on productive assets exchanged among market participants and people’s time preferences for consumption. |
real risk-free rate | r* |
| This is the rate for a riskiess security that is exposed to changes in inflation. | Nominal risk—free rate | r RF |
| This is a premium added to the real risk free rate to compensate for a decreased in purchasing power over time | Inflation Premium | IP |
| This is the premium added to the equilibrium interest rate on a Liquidity risk premium V security that cannot be bought or sold quickly enough to prevent or minimize loss. | Liquidity risk premium | LP |
| This is the premium that reflects the risk associated with changes in interest rates for a long term securit | Maturity risk premium | MRP |
| This is a premium added to the real risk free rate to compensate for the risk that investor will not get paid in full | Default Risk Premium | DRP |
