The eight-month lag in the indexation of the value of U.K. index-linked gilts, far from being a nuisance, actually makes possible the derivation of estimates of expected inflation from a comparison of the prices of two indexed bonds differing only in their durations, without recourse to any...

In principle, the gilt-equity yield ratio (GEYR) can be used as a decision criterion for choosing between equity and bonds because the GEYR is sensitive to miss-pricing. However, the GEYR is also influenced by other variables. Consequently, observed movement in the GEYR cannot be confidently...