THE DIFFERENTIAL EFFECTS OF SINKING FUNDS ON BOND RISK PREMIA

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

Research output: Contribution to journalArticle

6 Scopus citations

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

ASJC Scopus subject areas

  • Accounting
  • Finance

Fingerprint Dive into the research topics of 'THE DIFFERENTIAL EFFECTS OF SINKING FUNDS ON BOND RISK PREMIA'. Together they form a unique fingerprint.

  • Cite this