Squire inc.'s 5-year bonds yield 6.75%, and 5-year t-bonds yield 4.80%. the real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is ip = 1.65%, the default risk premium for squire'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) × 0.1%, where t = number of years to maturity. what is the liquidity premium (lp) on squire's bonds?
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Squire inc.'s 5-year bonds yield 6.75%, and 5-year t-bonds yield 4.80%. the real risk-free rate is r...
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