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Notices
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1 July 2010 Financial Analysts Journal Volume 66, Issue 4

Explaining and Forecasting Bond Risk Premiums

Gerardo Palazzo and Stefano Nobili

In examining the risk premiums for U.S. and German 10-year government bond yields, the authors found that the decline in bond risk premiums since the 1980s is associated with a decrease in global output variability and an increase in the power of 10-year government bonds to diversify portfolios.

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