Niendorf Corporation's 5-year bonds yield 6.75%,and 5-year T-bonds yield 4.80%.The real risk-free rate is r* = 2.75%,the inflation premium for 5-year bonds is IP = 1.65%,the default risk premium for Niendorf's bonds is DRP = 1.20% 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?
A) 0.49%
B) 0.55%
C) 0.68%
D) 0.75%
Correct Answer:
Verified
Q111: Zumwalt Corporation's Class S bonds have a
Q112: Which of the following best describes a
Q113: Keenan Industries has a bond outstanding with
Q114: O'Brien Ltd.'s outstanding bonds have a $1,000
Q115: A 25-year,$1,000 par value bond has an
Q117: Which of the following best describes zero
Q118: Crockett Corporation's 5-year bonds yield 6.85%,and 5-year
Q119: Five-year Treasury bonds yield 5.5%.The inflation premium
Q120: ABC Inc.issued at par value a 15-year
Q121: Which of the following is NOT true
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents