An average inflation rate which is expected over life of security is classified as

An average inflation rate which is expected over life of security is classified as Correct Answer inflation premium

An average inflation rate which is expected over life of security is classified as inflation premium. An inflation premium is the part of prevailing interest rates that results from lenders compensating for expected inflation by pushing nominal interest rates to higher levels. Key points : Investors seek this premium to compensate for the erosion in the value of their capital due to inflation.
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