Essays in asset pricing and portfolio choice /

Bibliographic Details
Main Author: Illeditsch, Philipp Karl
Other Authors: Back, K. (Kerry) (Thesis advisor)
Format: Thesis eBook
Language:English
Published: [College Station, Tex.] : [Texas A&M University], [2010]
Subjects:
Online Access:Link to OAK Trust copy

MARC

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099 |a 2007  |a Dissertation  |a 1969.1/ETD-TAMU-1508 
100 1 |a Illeditsch, Philipp Karl. 
245 1 0 |a Essays in asset pricing and portfolio choice /  |c by Philipp Karl Illeditsch. 
264 1 |a [College Station, Tex.] :  |b [Texas A&M University],  |c [2010] 
300 |a 1 online resource. 
336 |a text  |b txt  |2 rdacontent 
337 |a computer  |b c  |2 rdamedia 
338 |a online resource  |b cr  |2 rdacarrier 
500 |a "Major Subject: Finance" 
500 |a Title from author supplied metadata (automated record created 2010-03-12 12:08:51). 
502 |b Doctor of Philosophy  |c Texas A&M University  |d 2007  |o http://hdl.handle.net/1969.1/ETD-TAMU-1508 
504 |a Includes bibliographical references. 
516 |a Text (Dissertation) 
520 3 |a In the first essay, I decompose inflation risk into (i) a part that is correlated with real returns on the market portfolio and factors that determine investor's preferences and investment opportunities and (ii) a residual part. I show that only the first part earns a risk premium. All nominal Treasury bonds, including the nominal money-market account, are equally exposed to the residual part except inflation-protected Treasury bonds, which provide a means to hedge it. Every investor should put 100% of his wealth in the market portfolio and inflation-protected Treasury bonds and hold a zero-investment portfolio of nominal Treasury bonds and the nominal money market account. In the second essay, I solve the dynamic asset allocation problem of finite lived, constant relative risk averse investors who face inflation risk and can invest in cash, nominal bonds, equity, and inflation-protected bonds when the investment opportunityset is determined by the expected inflation rate. I estimate the model with nominal bond, inflation, and stock market data and show that if expected inflation increases, then investors should substitute inflation-protected bonds for stocks and they should borrow cash to buy long-term nominal bonds. In the lastessay, I discuss how heterogeneity in preferences among investors withexternal non-addictive habit forming preferences affects the equilibrium nominal term structure of interest rates in a pure continuous time exchange economy and complete securities markets. Aggregate real consumption growth and inflation are exogenously specified and contain stochastic components that affect their means andvolatilities. There are two classes of investors who have external habit forming preferences and different local curvatures of their utility functions. The effects of time varying risk aversion and different inflation regimes on the nominal short rate and the nominal market price of risk are explored, and simple formulas for nominal bonds, real bonds, and inflation risk premia that can be numerically evaluated using Monte Carlo simulation techniques are provided. 
500 |a Electronic resource. 
650 4 |a Major finance. 
653 |a Inflation 
653 |a Inflation-Protected Bonds 
653 |a Nominal Term Structure 
653 |a Idiosyncratic Inflation Risk 
653 |a Inflation-Indexed Bonds 
653 |a Dynamic Asset Allocation 
653 |a Dynamic Portfolio Choice 
653 |a Heterogeneous Preferences 
653 |a External Habit 
653 |a Asset Pricing 
700 1 |a Back, K.  |q (Kerry),  |e thesis advisor. 
856 4 0 |u http://hdl.handle.net/1969.1/ETD-TAMU-1508  |z Link to OAK Trust copy  |t 0 
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952 f f |a Texas A&M University  |b College Station  |c Electronic Resources  |d Available Online  |t 0  |e 2007 Dissertation 1969.1/ETD-TAMU-1508  |h Other scheme 
998 f f |a 2007 Dissertation 1969.1/ETD-TAMU-1508  |t 0  |l Available Online