A rational story for the high yields of market-discount munis could be a convenience yield
demanded by individuals to deal with the complexities of computing tax liabilities.
Housing Price Variation and the Convenience Yield
to Owning a Home" by Jason Thomas and Robert Savickas.
This is said to occur due to the convenience yield
being higher than the prevailing risk free rate.
This convenience yield
reflects the flexibility created by holding inventory.
Storage benefits may sound strange, but the notion of a convenience yield
is quite intuitive.
For the crop there is assumed to be a world futures market, which can be used to determine the convenience yield
In theory, the convenience yield
is the flow of services that accrue to the holder of the spot commodity but not to the holder of a futures contract.
The Relationship Between Risk Premium and Convenience Yield
Models (Viola Markert and Heinz Zimmermann).
The authors argue that the corporate bond spread reflects a convenience yield
that investors attribute to Treasury debt.
The classic theory of storage argues that producers and distributors never completely sell off inventories because they earn a convenience yield
from holding stocks.
The benefits and costs of having a physical inventory of oil instead of a futures contract are referred to collectively as the implied convenience yield
in the futures market.
In sum, these observations suggest to me that trading generated a "convenience yield
" for Palm shares, just as physical trading generates a convenience yield