Answer:
D. Inflation
Step-by-step explanation:
According to a different source, these are the options that are included with this sentence:
A. default risk
B. taxability
C. liquidity
D. inflation
E. interest rate risk
Inflation premium refers to the component of a return that compensates for inflation risk. This is the portion of the yield that compensates for the risk of decrease in the purchasing power of money. The yield on a bond can be estimates by using a risk-free rate, plus the addition of inflation premiums, default risks, and other similar premiums.