Lower-Grade Bonds: Their Risks and Returns

Abstract

To reflect as realistically as possible the risks and returns of lower-grade bonds, the authors constructed an index from actual average returns used in the compilation of the Salomon Brothers and Drexel Burnham Lambert lower-grade indexes, supplementing these with month-end prices prior to 1982 from the SP thus a diversified portfolio may contain both the debt and equity of the issuing companies.