Which of the four interest rate components had the greatest average percentage in the period from 1950-1999?
A) Real rate
B) Inflation premium
C) Historical interest rates
D) Default premium
Answer: B
Explanation: B) For the 50-year period from 1950-1999, 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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