Donations Not Factored In

Two researchers at the University of Pennsylvania’s Wharton School of Business announced the results of a study a week ago showing that, contrary to other recent reports, junk bonds aren’t excessively risky.

Officials at the school insist that there is absolutely no connection between the results of the study and the fact that Michael Milken, the former Drexel Burnham Lambert Inc. junk bond chief, is an alumnus of the school and over the years has donated at least $2.25 million to it.

The study by Wharton faculty members Marshall E. Blume and Donald B. Keim concluded that junk bonds issued in 1977 and 1978 yielded 8.5% in the 10 years after they were issued, after defaults on some of the bonds were factored in. They said this was a better return than on medium-term Treasury bonds in the same period.

Blume, reached by phone, said he was completely unaware that Milken had given money to Wharton.