Capital Structure Arbitrage: An Empirical Investigation Using Stocks and High Yield Bonds

Topics:
Investment and Capital Markets
Tags:
Bond,
Capital Structure,
Capital Structure Arbitrage,
Capital Structures,
Derivatives,
Finance,
Financial Services,
Investment,
Stock
Source:
Center for International Securities and Derivatives Markets

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Overview: Capital structure arbitrage is one of the most recent hedge fund strategies that are rapidly gaining popularity amongst traders. This paper looks at the possibility of arbitraging mispricings between a company's high yield bond and stock. The argument behind the strategy is that the equity and debt markets quite often react to information differently.

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Format: PDF | Size: 725KB | Date: Feb 2004 | Pages: 15

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