Calculate the liquidity risk premium on tom and sues


Tom and Sue’s Flowers, Inc.’s, 15-year bonds are currently yielding a return of 8.35 percent. The expected inflation premium is 2.35 percent annually and the real risk-free rate is expected to be 3.60 percent annually over the next 15 years. The default risk premium on Tom and Sue’s Flowers’ bonds is 0.60 percent. The maturity risk premium is 0.55 percent on 10-year securities and increases by 0.06 percent for each additional year to maturity. Calculate the liquidity risk premium on Tom and Sue’s Flowers, lnc.’s, 15-year bonds. (Round your answer to 2 decimal places.)

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Calculate the liquidity risk premium on tom and sues
Reference No:- TGS02863030

Expected delivery within 24 Hours