The Impact of Relative Security Supplies: A Test with Data from a Regional Tax-Exempt Bond Market

Hendershott, Patric H.; Kidwell, David S.
August 1978
Journal of Money, Credit & Banking (Ohio State University Press);Aug78, Vol. 10 Issue 3, p337
Academic Journal
The article reports on whether changes in relative security studies have an impact on relative interest rates. The impact that changes in the long term federal debt have on the relationship between the yields on newly issued U.S. government and corporate debt are assumed to be minimal. However, these instruments of debt are substitutes in so many portfolios that it is unlikely there isn't a significant impact. An increase in the relative supply of small-size tax-exempt bonds in a regional market increases both regional borrowing costs and costs of particular bond issues relative to those nationwide.


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