What is the liquidity risk premium percentage

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Tom and Sue's Flowers Inc., 10- year bonds are currently yielding a return of 8.55 percent.  The expected inflation period is 2.55 percent annually and the real risk-free rate is expected to be at 3.55 percent annually over the next 10 years.  The default risk premium on Tom and Sue's Flowers bonds is 0.70 percent.  The maturity risk premium is 0.65 percent of 5- year securities and increased by 0.09 percent each additional year to maturity. 

Calculate the liquidity risk premium on Tom and Sue's Flowers Inc., 10-year bonds.

What is the liquidity risk premium percentage?

Reference no: EM131660538

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