Question

The inflation premium: A. increases the real return. B. is inversely related to the time to maturity. C. remains constant over time. D. rewards investors for accepting interest rate risk. E. compensates investors for expected price increases.

Answer 1

Answer:

The answer is E. compensates investors for expected price increases.

Explanation:

Inflation premium arise from  that, investors holding nominal assets

are exposed to unanticipated changes in inflation.