INSTRUCTIONS
For this assignment, you will examine bond yields and interest rates, real interest rate and five premiums that investors demand as compensation for risk, expected future inflation, interest rate risk, default risk, taxability and lack of liquidity. Define each of these concepts and explain how they influence investors. The final product will be a paper that is 1-2 double-spaced, APA formatted pages, a reference list should also be included on a new page after the body of your paper.
The requirements for your Unit 2 Assignment are:
· Demonstrate that bond yields and interest rates reflect the effect of six different things.
· Define the real interest rate and five premiums that investors demand as compensation for risk.
· Define each of these concepts: expected future inflation, interest rate risk, default risk, taxability and lack of liquidity
· Explain how each of these concepts influence investors: expected future inflation, interest rate risk, default risk, taxability and lack of liquidity Please see the rubric on the next page for specific information about grading details.