Finance Assignment | Professional Writing
June 10th, 2020
Squire Inc.’s 5-year bonds yield 6.75%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, and the default risk premium for Squire’s bonds is DRP = 1.20% versus zero for T-bonds.
What is the maturity risk premium (MRP) for all bonds and the liquidity premium (LP) on Squire’s bonds?
MRP = ______
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