CFA Institute: Private Wealth Management Newsletter (August 2009)
A bond with an estate put (or survivor’s option) can be redeemed at face value by the holder’s heirs if the holder dies — an attractive feature to investors with a short life expectancy. How should an investor value such options?
The municipal yield curve’s permanent upward slope is a logical consequence of that curve being comprised of bonds callable at or close to par after 10 years. Previous researchers have overlooked this simple, straightforward explanation.
