Liquidity premium on aaa bonds lp 2and zero on treasury, Financial Management

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Liquidity premium on aaa bonds lp 2and zero on treasury

Firm AAA's five year bonds yield = 8% and five year Treasury bonds yield = 5%. The real risk free rate, r* = 2%; default risk premium for AAA's bonds DRP = 0.50%;

Liquidity premium on AAA bonds LP = 2%and zero on Treasury bonds;inflation premium (IP) = 1.5%. Calculate for maturity risk premium.

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Financial Management: Liquidity premium on aaa bonds lp 2and zero on treasury

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Financial Management: Liquidity premium on aaa bonds lp 2and zero on treasury

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