Chartered Financial Analyst Level 1
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The time preference of individuals for current versus future real consumption is best represented by the:
A
Liquidity premium, which compensates investors for the risk of loss if an investment must be quickly converted to cash.
B
Maturity premium, which compensates investors for the increased sensitivity of debt to changes in market interest rates as maturity extends.
C
Real risk-free interest rate, which reflects the time preferences of individuals for current versus future real consumption.