The risk premium you receive as a saver is based in part on:
A) your credit rating.
B) the amount of money you are borrowing.
C) the uncertainty associated with getting your money back.
D) the expected rate of inflation.
E) the uncertainty associated with getting your money back and the expected rate of inflation.

Question

Quizplus · Accepted Answer

The risk premium that savers receive is based on the uncertainty associated with getting their money back and the expected rate of inflation. The risk premium is the additional return that savers require to compensate them for the risk of loaning their money. Savers want to be compensated for the possibility that they may not receive their initial investment back or that the value of their investment may decrease due to inflation.

The Risk Premium You Receive as a Saver Is Based