## Puzzle #10: A Hint

Puzzle #10: Erratic Bond Pricing? asks you what might explain some apparently erratic swings in yields for certain sporadically traded municipal bonds.  I stated that the bonds share the same issuer and maturity date.

The puzzle is a bit sneaky, so it’s time for a hint.  While the bonds have the same issuer and maturity, I did not say they are completely alike in all respects.

Hope that helps.  Let me know.

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### 8 Responses to Puzzle #10: A Hint

1. Jeff Pickett says:

Different coupons? Or, if same coupon, are they being affected by the de minimus rule?

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• Win Smith says:

Thank you. The coupons are different but not far apart, so the key to the puzzle is something else.

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• Jeff p says:

Different call dates or prices?

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• Win Smith says:

Jeff, well done! The call dates are significantly different. I’ll post the details tomorrow.

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• Jeff p says:

You know what I also find interesting is the affect on pricing of bonds approaching the call date. Traders/investors start playing the “will they or won’t they be called” game.

By the way, looks like you met Dave Abel. He taught me (teaches me) everything I know.

I work at William Blair.

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2. Jeff p says:

And Win, thanks for this website. It’s fun and makes me think.

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• Win Smith says:

Jeff, thank you. I’m glad you enjoy the website, and I hope it continues to interest you.

Yes, I know your colleague Dave Abel, and I’m also learning from him. He is really the source of this puzzle.

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