Drag and drop the interest rate components to the correct categories! Each component can appear in multiple boxes. Feedback will show what should be in each box below.
r*: Real risk-free rate, representing the base return with no risk or inflation.
IP: Inflation premium, compensating for expected inflation over the investment period.
MRP: Maturity risk premium, accounting for risks associated with longer investment durations.
DRP: Default risk premium, addressing the risk of non-payment by the borrower.
LP: Liquidity premium, added for investments that are not easily tradable or liquid.