12) Philip Corp's 12-year Bonds yield 7.50%; and 12-year Treasury Bonds yield 5.95%. The real risk-free...

   

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12) Philip Corp's 12-year Bonds yield 7.50%; and 12-year Treasury Bonds yield 5.95%. The real risk-free rate is r= 2.50%; the average annual inflation premium for 12-year bonds is IP-2.35%; the default risk premium for Philip Corp's bonds is 1.30%;, and the maturity risk premium for all bonds is found with the formula MRP=0.1 x (t-1) %, where t= number of years to maturity. What is the liquidity premium on Philip's bonds? A) 0.30% B) 0.45% C) 0.32% D) 0.21% E) 0.25% 12) Philip Corp's 12-year Bonds yield 7.50%; and 12-year Treasury Bonds yield 5.95%. The real risk-free rate is r= 2.50%; the average annual inflation premium for 12-year bonds is IP-2.35%; the default risk premium for Philip Corp's bonds is 1.30%;, and the maturity risk premium for all bonds is found with the formula MRP=0.1 x (t-1) %, where t= number of years to maturity. What is the liquidity premium on Philip's bonds? A) 0.30% B) 0.45% C) 0.32% D) 0.21% E) 0.25%

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