Which one of the following risk premiums compensates for the inability to easily resell a bond prior to maturity?

Question

Quizplus · Accepted Answer

Liquidity premium compensates investors for the risk that they may not be able to quickly sell the bond if they need to raise funds prior to maturity. This may result in a lower price when selling the bond, or in extreme cases, a complete inability to sell the bond. Default risk compensates investors for the risk that the borrower will not pay back the bond, taxability compensates for tax liability, inflation risk compensates for the risk that inflation will lower the bond's purchasing power, and interest rate risk compensates for the risk of changes in interest rates affecting the value of the bond.

Which One of the Following Risk Premiums Compensates for the Inability