THE DIFFERENTIAL EFFECTS OF SINKING FUNDS ON BOND RISK PREMIA

W. Brian Barrett, Andrea Heuson, Robert W. Kolb

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This study analyzes the effect that two options created by the inclusion of a sinking fund clause in a bond indenture have on the bond issue's secondary market risk premium. The impact of market prices that exceed current sinking fund redemption prices, and of par versus premium redemption, is clearly apparent when a set of issue‐specific and macroeconomic control variables are incorporated into a model of bond risk premia. Thus, secondary market prices for the large‐volume utility bond transactions in the sample reflect knowledge of individual‐issue, time‐varying indenture characteristics.

Original languageEnglish (US)
Pages (from-to)303-312
Number of pages10
JournalJournal of Financial Research
Volume9
Issue number4
DOIs
StatePublished - Jan 1 1986

Fingerprint

Risk premia
Secondary market
Market price
Market risk premium
Macroeconomics
Inclusion
Control variable
Time-varying
Premium

ASJC Scopus subject areas

  • Accounting
  • Finance

Cite this

THE DIFFERENTIAL EFFECTS OF SINKING FUNDS ON BOND RISK PREMIA. / Barrett, W. Brian; Heuson, Andrea; Kolb, Robert W.

In: Journal of Financial Research, Vol. 9, No. 4, 01.01.1986, p. 303-312.

Research output: Contribution to journalArticle

Barrett, W. Brian ; Heuson, Andrea ; Kolb, Robert W. / THE DIFFERENTIAL EFFECTS OF SINKING FUNDS ON BOND RISK PREMIA. In: Journal of Financial Research. 1986 ; Vol. 9, No. 4. pp. 303-312.
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