Tom and Sues Flowers, Inc.s 20-year bonds are currently yielding a return of 8.80 percent....
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Tom and Sues Flowers, Inc.s 20-year bonds are currently yielding a return of 8.80 percent. The expected inflation premium is 2.80 percent annually and the real risk-free rate is expected to be 3.50 percent annually over the next 20 years. The default risk premium on Tom and Sues Flowers bonds is 0.80 percent. The maturity risk premium is 0.75 percent on 10-year securities and increases by 0.03 percent for each additional year to maturity. Calculate the liquidity risk premium on Tom and Sues Flowers, lnc.s 20-year bonds. (Round your answer to 2 decimal places.)
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