Download This PaperA Different Spin on Investing in Equity and Debt of the Same Firm: An Extension of Wibaut and Wilford (2009)
2 Pages Posted: 24 Nov 2015
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A Different Spin on Investing in Equity and Debt of the Same Firm: An Extension of Wibaut and Wilford (2009)
Journal of Applied Finance (Formerly Financial Practice and Education), Vol. 21, No. 2, 2013
Number of pages: 2
Posted: 24 Nov 2015
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A Different Spin on Investing in Equity and Debt of the Same Firm: An Extension of Wibaut and Wilford (2009)
Journal of Applied Finance, Fall/Winter 2011, Volume 21, Issue 2, pp. 142-143
Posted: 08 Aug 2012
Date Written: November 16, 2015
Abstract
Wibaut and Wilford (Journal of Applied Finance, 2009) argue that owning both the equity and the debt of the same firm is suboptimal. Playing a different game, I argue that buying the debt and equity of the same firm may be an optimal strategy aimed at delivering the firms that have issued more debt than the investor wants. The objective of the investor in this paper is not to maximize the return, but rather to earn the same return as would be earned with zero debt by investing in equity.
Suggested Citation: Suggested Citation
Bierman, Harold, A Different Spin on Investing in Equity and Debt of the Same Firm: An Extension of Wibaut and Wilford (2009) (November 16, 2015). Journal of Applied Finance (Formerly Financial Practice and Education), Vol. 21, No. 2, 2013, Available at SSRN: https://ssrn.com/abstract=2691620
Harold Bierman (Contact Author)
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
Ithaca, NY 14853
United States
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