Which of the four interest rate components had the smallest average percentage in the period from 1950-1999?
A) Maturity premium
B) Real rate
C) Inflation premium
D) Default premium
Answer: D
Explanation: D) From 1950 to 1999, inflation averaged 4.05%, the real rate averaged 1.18%, the maturity premium averaged 1.28% (for twenty-year maturity differences), and the default premium averaged 0.49% (for AAA over government bonds).
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