publication . Report . Preprint . Book . 1983

inflation and the role of bonds in investor portfolios

Zvi Bodie; Alex Kane; Robert McDonald;
Open Access
  • Published: 01 Mar 1983
  • Publisher: National Bureau of Economic Research
Abstract
This paper explores both theoretically and enirically the role of nominalbonds of various maturities in investor portfolios in the U.S. One of its principal goals is to determine whether an investor who is constrained to limithis investment in bonds to a single portfolio of money-fixed debt instruments will suffer a serious welfare loss. Our interest in this question stemsi n part from the observation that many employer-sponsored savings plans limit a participant's investment choices to two types, a common stock fund and a money-fixed bond fund of a particular maturity. A second goal is to study the desirability and feasibility of introducing a market for index ...
Subjects
free text keywords: Capital asset pricing model, Financial economics, Bond market index, Stock fund, Econometrics, Risk premium, Bond fund, Risk-free interest rate, Portfolio, Asset allocation, Economics
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min/ • 1. In the revised version of their paper, the authors advocate the use of futures as the

stock futures; and marking to the market involves intermediate cash flows. 2. See Edwin J. Elton and Martin J. Gruber, "The Multiperiod Consumption Invest-

ment Problem and Single Period Analysis," Oxford Economic Papers 26 (July, 1974) :289-

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