Brian Spangler Davis, Thesis Supervisor Brian Spangler Davis, Thesis Honors Advisor Joel Matthew Vanden, Faculty Reader
Keywords:
Fiscal Debt GDP GDP-Linked Bonds Fiscal Debt Limit Investors Diversification Financial Markets US Government Debt Investment Risk Premium
Abstract:
GDP-Linked Bonds are a relatively new product in financial markets that can be utilized by sovereign nations and investors in order to diversify their fiscal debt structure and investment portfolios, respectively. This new investment instrument has a variety of advantages and disadvantages that will be discussed throughout this thesis. This work explores GDP-Linked bonds, their history in the financial markets, and current and previous research surrounding the topic. This research leads us to insight on the appropriate risk premium for a 10-year US GDP-Linked Bond, the logistics and design of a GDP-Linked Bond, and how this instrument would price in certain market conditions. This work is intended to support previous works surrounding GDP-Linked Bonds in an effort to raise awareness to the advantages of using such a debt instrument in financial markets in the global landscape today.
