If investors are uncertain that they will be able to sell a corporate bond quickly, the investors will demand a higher yield in the form of a(n) _________________.

Question

Quizplus · Accepted Answer

If investors are uncertain about the ability to sell a corporate bond quickly, they may demand a higher yield in the form of a liquidity risk premium. This compensates them for the risk that they may not be able to sell the bond easily if they need to convert it into cash before its maturity date.

If Investors Are Uncertain That They Will Be Able to Sell