What is the liquidity premium on squire bonds in percent

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Reference no: EM131874699

Squire Inc.'s 11-year bonds yield 8.76%, and 5-year T-bonds yield 5.64%. The real risk-free rate is r* = 2.13%, the inflation premium for 5-year bonds is IP = 1.69%, the default risk premium for Squire's bonds is DRP = 1.24% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t − 1) × 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Squire's bonds in percent?

Reference no: EM131874699

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