The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Indexed Securities

  • Alicia H. Munnell
  • Joseph B. Grolnic
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_803

Abstract

Conventional securities are generally offered at a fixed coupon rate that incorporates the underlying expected real rate of return in the economy, the market’s expectation at the time the security is issued of inflation over the duration of the instrument, a premium to compensate for the fact that future rates of inflation are uncertain, and an adjustment reflecting the tax treatment of interest on behalf of both the lender and the borrower. For simplicity, it is useful to abstract temporarily from the inflation risk premium and taxes, although both these factors will be discussed later.

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Bibliography

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Alicia H. Munnell
    • 1
  • Joseph B. Grolnic
    • 1
  1. 1.