Research finds reverse convertible products are 'significantly' overpriced

A new study looking at reverse convertibles in the Dutch market, one of the most developed in the world, has concluded that plain vanilla and knock-in reverse convertible bonds are, on average, overpriced by almost 6%. Overpricing persisted for almost six months after the issuance of the product, when banks were sellers of the bonds, but will disappear as they near maturity, when the banks that maintain the market are more likely to be buyers.

The researchers, Marta Szymanowska, Jenke Ter Horst