MALKIEL, Burton G.; William J. Baumol; Richard E. Quandt.
The Quarterly Journal of Economics: The Valuation of Convertible Securities.
Cambridge, Massachusetts: The Quarterly Journal of Economics , 1966.
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An Offprint of the February 1966 Issue of The Quarterly Journal of Economics, Containing "The Valuation of Convertible Securities"; Signed by Burton Malkiel and From His Own Personal Collection
Rare offprint of the February 1966 issue of The Quarterly Journal of Economics, containing William J. Baumol, Burton G. Malkiel, Richard E. Quandt's article "The Valuation of Convertible Securities." Octavo, original wrappers, volume 80. Boldly signed by Burton Malkiel on the front wrapper. Burton Gordon Malkiel (born 1932) is one of the most consequential financial economists of the postwar American academy, whose career as scholar, institutional leader, and public intellectual has made him a central figure at the intersection of investment theory, market efficiency, and public policy. Educated at Harvard and Princeton, where he spent the most productive decades of his career as Chemical Bank Chairman's Professor of Economics, Malkiel also served as Dean of the Yale School of Management from 1981 to 1988 and as a member of the President's Council of Economic Advisers under Gerald Ford from 1975 to 1977. His scholarly output encompasses foundational contributions across the term structure of interest rates, convertible security valuation, corporate capital structure, closed-end fund discounts, mutual fund performance, and gender pay differentials in professional employment, producing a body of work whose empirical breadth places him among the most versatile financial economists of his generation. His long service on the board of directors of The Vanguard Group connects his academic advocacy for passive investing to the institutional infrastructure that has most fully realized it in practice. It is nevertheless A Random Walk Down Wall Street, first published in 1973 and now in its thirteenth edition, that secured his place in the broader culture: a work of lucid, empirically grounded argument for market efficiency and index fund investing that has sold over 1.5 million copies and permanently altered the investment behavior of millions of individual investors worldwide. From the personal collection of Burton Malkiel. In fine condition.
"The Valuation of Convertible Securities," co-authored by Burton G. Malkiel with William J. Baumol and Richard E. Quandt and published in the Quarterly Journal of Economics, Volume 80 (February 1966), is a foundational paper in the theory of hybrid securities and one of the earliest rigorous analytical treatments of convertible bond valuation in the economics literature. The paper addresses the fundamental challenge posed by convertible securities — instruments that combine the characteristics of straight debt with an embedded option to convert into equity — and develops a formal mathematical framework for decomposing and pricing that dual character. The valuation model proposed by Baumol, Malkiel, and Quandt is classified in the subsequent literature as a static stochastic model — one in which the valuation is conducted for some known date rather than dynamically across a period of time — and it stands as one of the representative early examples of the calculus-based approach to convertible security pricing that preceded the option-theoretic revolution inaugurated by Black and Scholes in 1973. The paper's significance lies in its early recognition that the proper valuation of a convertible bond cannot be accomplished by treating it as either a pure debt instrument or a pure equity instrument, but requires an integrated framework that accounts simultaneously for the bond's income characteristics, its conversion premium, and the probabilistic behavior of the underlying equity — a set of insights that would be substantially formalized and extended by subsequent work in contingent claims analysis, and that continues to inform the rich literature on convertible bond valuation that the paper helped inaugurate.
The Quarterly Journal of Economics: The Valuation of Convertible Securities.
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