Liquidity Premium Assignment | Homework For You
May 26th, 2020
Exercise 4. Consider a mean-variance optimizer that wants to invest in bonds for two periods. In order for them to be indifferent between a two year bond and rolling over two one year bonds, what must the liquidity premium equal? What if they want to invest in N periods and are indifferent between an N period bond and an N – 1 period bond rolled over into a one period bond? What must the liquidity premium equal then?Get Finance homework help today

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