Question

There is an increase in the perceived marketability of a company’s bonds, so the liquidity premium decreases. What impact with this have on Yield? Will the cost of borrowing money from Bond markets become more expensive or less expensive?

Name: there is an increase in the perceived marketability of a companys bonds so the liquidity premium decreases what impact with this have on yield will the cost of borrowing money from bond mark 20722
Uploaded: 2021-05-10T02:02:39-08:00
Duration: 1 min 15 s
Channel: Oluwadamilola Ameobi
Description: there is an increase in the perceived marketability of a companys bonds so the liquidity premium decreases what impact with this have on yield will the cost of borrowing money from bond mark 20722

          There is an increase in the perceived marketability of a company’s bonds, so the liquidity premium decreases. What impact with this have on Yield? Will the cost of borrowing money from Bond markets become more expensive or less expensive?

Added by Ignacio C.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Oluwadamilola Ameobi

05/10/2021

Step 1

The liquidity premium is the additional yield that investors require to hold a bond that is less liquid, meaning it is harder to sell quickly without affecting its price. A decrease in the liquidity premium indicates that the bonds are perceived as more marketable Show more…

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There is an increase in the perceived marketability of a company’s bonds, so the liquidity premium decreases. What impact with this have on Yield? Will the cost of borrowing money from Bond markets become more expensive or less expensive?