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GAMA Corporation's 5-year bonds yield 6.20% and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5-year bonds
GAMA Corporation's 5-year bonds yield 6.20% and 5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%, the inflation premium for 5-year bonds is IP = 1.50%, the default risk premium for GAMA's bonds is DRP = 1.30% versus zero for T-bonds, and the T-bonds and corporate bonds have the same maturity risk premium. What is the liquidity premium on GAMA's bonds?
0.50% | ||
1.55% | ||
0.41% | ||
0.30% | ||
0.36% |
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