Scientific Evidence
Two financial economists, Lobe and Hoelzl, have analysed the main driving factors for the immense success of Premium Bonds. One in three Britons invest in Premium Bonds. The thrill of investment is significantly boosted by enhancing the skewness of the prize distribution. Using data collected over the past fifty years they find that the bond bears relatively low risk by conventional risk measures.
Aaron Brown discusses premium bonds in comparison with equity-linked, commodity-linked and other "added risk" bonds. His conclusion is that it makes little difference, either to an investor or from a theoretical finance perspective, whether the added risk comes from a random number generator or a financial security price.
Read more about this topic: Premium Bond
Famous quotes containing the words scientific and/or evidence:
“To develop an empiricist account of science is to depict it as involving a search for truth only about the empirical world, about what is actual and observable.... It must involve throughout a resolute rejection of the demand for an explanation of the regularities in the observable course of nature, by means of truths concerning a reality beyond what is actual and observable, as a demand which plays no role in the scientific enterprise.”
—Bas Van Fraassen (b. 1941)
“If you are of the opinion that the contemplation of suicide is sufficient evidence of a poetic nature, do not forget that actions speak louder than words.”
—Fran Lebowitz (b. 1951)