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It is based on the bond’s marketability and trading frequency; the less frequently the security is traded, the higher the premium added, thus increasing the interest rate. __________

Respuesta :

Answer:

The correct answer is:  liquidity risk premium.

Explanation:

Liquidity risk premium or LP is a type of premium requested by the security's investors when it cannot be converted to cash. The security is considered illiquid in the case the premium is high. Examples of these investments are certificates of deposit, real state, or loans.

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