Standard theoretical model cannot generate positive and large real bond risk premium under power utility preferences. Following recent developments in equity premium literature we explore bond premium in a long run risk environment with generalized isoleastic preferences. This approach explains...

In this paper we present an integral equation approach for the valuation of European-style installment derivatives when the premium payments, made continuously throughout the contract’s life, are assumed to be a function of the asset price and time variables. The contribution of this study is...