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| Author: | Adland, R. Cullinane, K. |
| Title: | A time-varying risk premium in the term structure of bulk shipping freight rates |
| Journal: | Journal of Transport Economics and Policy
2005 : MAY, VOL. 39:2, p. 191-208 |
| Index terms: | shipping industry freight transport prices risk premium markets |
| Language: | eng |
| Abstract: | Based on logic and maritime economic theory alone, this paper presents a simple argument for rejecting the applicability of the expectations theory in bulk shipping freight markets (here as: f-mkts). It is shown that the risk premium (as: r-prm.) must be time varying and must depend on f-mkts. conditions and the duration of a period time charter. The signs of the r-prm. attributable to the various risk factors are derived. It is concluded that the theoretical net r-prm. will usually be negative with the possibility to change for a short-term period charter in a strong f-mkts. |
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