Question: You are considering purchasing a AA rated, 22 year bond. The AA bond risk premium at the 22 year maturity is 4%. The maturity

You are considering purchasing a AA rated, 22 year bond. The AA bond risk premium at the 22 year maturity is

You are considering purchasing a AA rated, 22 year bond. The AA bond risk premium at the 22 year maturity is 4%. The maturity risk premium, based on interest rate sensitivity is 2%. The bond's yield is 10.5%. The real rate is 1% and the expected inflation rate is 2.5%. What is the bond's liquidity risk premium (just fill in the number, with no label)?

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