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Pricing New Corporate Bond Issues: An Analysis of Issue Cost and Seasoning Effects
Author(s) -
FUNG W. K. H.,
RUDD ANDREW
Publication year - 1986
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1986.tb04525.x
Subject(s) - seasoning , underwriting , corporate bond , bond , business , financial economics , economics , actuarial science , finance , raw material , chemistry , organic chemistry
The pricing of new corporate bond issues is examined, with particular emphasis on the seasoning effect and the cost of underwriting. Considerable attention is paid to some special features of the corporate bond market, including the use of actual trader quotes so as to accurately measure holding period returns. Our results suggest that the cost of issuing corporate bonds is less than previously reported.