Advance refunding of tax-exempt debt

The technique of advance refunding is a transaction whereby issuers provide for the redemption of their bonds in advance of the date the bonds become callable. Typically, a new series of bonds is issued, and the proceeds are used to establish an escrowed portfolio of United States Treasury securities. The purpose of this dissertation is to examine advance refunding from three perspectives: (1) the effect the advance refunding will have on the equilibrium price of a callable bond, (2) the appropriate decision structure for an issuer, and (3) the effect of advance refunding on wealth transfers among bondholders, issuers, and federal taxpayers, and the appropriateness of the current regulatory structure for limiting "abusive" profits from advance refunding. [...]