Tom and suse flowers inc 15 year bonds are currently yielding a return of 9.75 %, the expected inflation premium 3.75% annually, and the real risk-free rate is expected to be 4.45% annually over the next 15 years. The default risk premium on top showers. Bonds is 0.70%. The maturity risk premium is 0.65% on 5 years. Securities and increases by 0.07% for each additional year. To maturity, calculate the liquidity risk premium on Tom and Sue's flowers 15 years bonds.

Answer rating: 100% (QA)

The liquidity risk premium is the extra return that investors demand for holding an illiquid asset s... View the full answer