Kay Corporation’s 5-year bonds yield 6.70% and 5-year T-bond…
Kay Corporation’s 5-year bonds yield 6.70% and 5-year T-bonds yield 4.40%. The risk-free rate is 4.00%, the default risk premium for Kay’s bonds is 1.30% versus zero for T-bonds, and the maturity risk premium for all bonds is 1.00%. What is the liquidity premium on Kay’s bonds?