Corporate bond investors are compensated for liquidity and counter-party risk in the yield received in excess of the … credit premium and risk-free rate. This paper shows that the liquidity premium as a hedge against uncertain future states is … interest rate risk. The liquidity premium increases with the time that investors must wait for compensation. The results …

This paper examines the effects of bond liquidity on firms' investments. We postulate that bond liquidity increases … variation in liquidity generated by the introduction of TRACE, we find that bond liquidity enables firms to expand capital … expenditures and acquisition activity. Furthermore, by enhancing access to funding, bond liquidity facilitates acquisition …

equilibrium liquidity provision from equity and bond dealers and non-monotonic stock-bond price comovement. We find supportive …