Note on Level-Debt-Service Municipal Bidding

Cohen and Hammer [Cohen, K. J., F. S. Hammer. 1966. Optimal level debt schedules for municipal bonds. Management Sci.13(3, November).] have shown that under certain conditions the problem of selecting a coupon-principal schedule, when bidding on a new issue of municipal bonds with a level-debt-service constraint, is a linear programming problem. A similar result was independently obtained by the present author, and is presented here, using the same definitions and notations as in Cohen and Hammer.