— Determination of Interest

Capital production ability —— the more the capital’s expected return, the higher the interest rates and vice versa.

Uncertainty of capital production ability —— the more the uncertainty, the higher the risk premium required and the higher the interest rates and vice versa.

Time preference of consumption —— the stronger preference to current consumption, the higher the risk premium required and the higher the interest rates and vice versa.

Risk aversion —— the more the risk aversion, the higher the risk premium required and the lower the risk-free interest rates.