this is the premium added to the equilibrium interest rate on a security that cannot be bought or sold quickly enough to prevent or minimize loss. this is the rate on short-term us treasury securities, assuming there is no inflation. it is calculated by adding the inflation premium to r*. this is the premium that reflects the risk associated with changes in interest rates for a long-term security. this is the premium added as a compensation for the risk that an investor will not get paid in full. this is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time.
