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Corporate bond yields and returns: a survey

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  • Stephanie Heck

    (Université de Liège)

Abstract

Corporate bonds offer higher yields than government bonds with similar maturity. This higher reward comes at the cost of higher risk. The question then arises of how this risk is priced into corporate bonds. This literature review provides a classification and summary of papers studying corporate bond prices and the premium they offer to investors over the return on risk-free securities. The review ranges from theoretical models to empirical determinants of corporate bond prices. A specific section is dedicated to the liquidity impact as this component has received special attention.

Suggested Citation

  • Stephanie Heck, 2022. "Corporate bond yields and returns: a survey," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 36(2), pages 179-201, June.
  • Handle: RePEc:kap:fmktpm:v:36:y:2022:i:2:d:10.1007_s11408-021-00394-4
    DOI: 10.1007/s11408-021-00394-4
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    More about this item

    Keywords

    Yield spreads; Corporate bond returns; Credit risk; Term structure; Liquidity;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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