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Niendorf corporations five-year bonds yield 675 and

Question - Niendorf Corporation's five-year bonds yield 6.75%, and five-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for five-year bonds is IP = 1.65%, the default risk premium for Niendorf's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) x 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Niendorf's bonds?

0.49%

0.55%

0.61%

0.68%

0.75%

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Accounting Basics: Niendorf corporations five-year bonds yield 675 and

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Accounting Basics: Niendorf corporations five-year bonds yield 675 and

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