Ep25 “Bubble Trouble” with Will Goetzmann
All Else Equal: Making Better Decisions
00:00
The Limits of a Zero Coupon Bond
Jonathan Mann: Are there any limits to this process where you can keep selling the security to yet another investor at an even higher price, therefore sustaining the bubble? He says yes. They're very strict limits. A zero coupon bond can't trade for more than a hundred dollars. It can't have a bubble component. No, absolutely. So that means the only security for which you could get a bubble component is what we would call an infinity-level security. We don't literally mean the security has to live forever. All we mean is we don't know the end date.
Transcript
Play full episode
