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vikingblood vikingblood
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A year ago
Niendorf Corporation’s 5-year bonds yield 7.15%, and 5-year T-bonds yield 5%. The real risk-free rate is r* = 2.85%, the inflation premium for 5-year bonds is IP = 1.75%, the default risk premium for Niendorf’s bonds is DRP = 1.3% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1)×0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Niendorf’s bonds?


▸

0.85%



▸

0.95%



▸

1.00%



▸

1.20%

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
Authors:
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wellsarwellsar
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A year ago
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