RISK-PREMIUM CURVES FOR DIFFERENT CLASSES OF LONG-TERM SECURITIES, 1950-1966.

This article presents risk-premium curves for a wide variety of risk classes of long-term securities for the period of 1950-1966 in the U.S. These curves represent the trade-off between the potential risk associated with a security and the potential returns. The authors explain how the curves were constructed and how risk and yield were calculated. They also discuss some of the limitations presented in the data. They discuss their findings and note that cyclical patterns were observed for all risk classes. Periods of economic expansion and rising interest rates led to bond yields falling below zero while common stocks rose. They note that this trend was reversed during economic contraction.