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That gap reflects the interest premium investors demand to hold the riskier Greek debt.
That gap reflects the interest premium investors demand to hold the more risky Greek debt.
Corporate borrowers pay an interest premium over the risk-free rate; equities have offered a higher long-term return than government bonds to reflect their higher risk.
Even though Ireland is paying an interest premium, its financing cost, about 3 percent of gross domestic product, is considered manageable.
The spread is the interest premium that investors demand to compensate for the greater risk of default or interruption of interest payments.
The revival is in part driven by a renewed search for yield by investors disappointed with the poor returns on cash or Treasuries: the interest premium they demand for holding junk has tumbled (see chart 2).The reopening of the junk-bond market has also afforded medium-sized firms access to credit again.
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Turmoil in the credit markets has sent interest premiums surging.
Furthermore, the interest rate premium demanded by investors for buying Spanish bonds compared with Germany's benchmark bonds fell this month below the comparable premium on Italian bonds for the first time since March of last year.
The interest rate premium on a currency merely reflects its implied depreciation over time.
When they start demanding a big interest rate premium, that's a sign of fear.
There is, in other words, no evidence, yet, of our having to pay an interest rate premium for our retaining exchange rate flexibility.
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