deficits and the prospect of high public debt/GDP ratios for many years is likely, at some point, to create policy dilemmas not only for central banks but also for public debt managers. Some countries have already had to cope with higher sovereign risk. Worries about both “fiscal dominance” and “financial repression” have certainly gained ground. Whatever view is taken of this, the boundary between monetary policy and government debt management has become increasingly blurred. Policy interactions
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THE JOURNAL OF FINANCE • VOL. LXIV, NO. 3 • JUNE 2009 Do Stock Mergers Create Value for Acquirers? PAVEL G. SAVOR and QI LU∗ ABSTRACT This paper finds support for the hypothesis that overvalued firms create value for long-term shareholders by using their equity as currency. Any approach centered on abnormal returns is complicated by the fact that the most overvalued firms have the greatest incentive to engage in stock acquisitions. We solve this endogeneity problem by creating a sample of
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What Explains the Stock Market’s Reaction to Federal Reserve Policy? Ben S. Bernanke Kenneth N. Kuttner∗ February 7, 2003 Abstract This paper analyzes the impact of unanticipated changes in the Federal funds target on equity prices, with the aim of both estimating the size of the typical reaction, and understanding the reasons for the market’s response. On average over the May 1989 to December 2001 sample, a “typical” unanticipated 25 basis point rate cut has been associated with a 1.3 percent
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change in total cost resulting from a decision, and incremental revenue as the change in total revenue resulting from a decision, any business decision is profitable if: a. it increases revenue more than costs or reduces costs more than revenue b. it decreases some costs more than it increases others (assuming revenues remain constant) c. it increases some revenues more than it decreases others (assuming costs remain constant) d. all of the above e. b and c only 3. In
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Universityof Chicago This paper attempts to explain how the separation of security ownership and control, typical of large corporations, can be an efficient form of economic organization. We first set aside the presumption that a corporation has owners in any meaningful sense. The entrepreneur is also laid to rest, at least for the purposes of the large modern corporation. The two functions usually attributed to the entrepreneur-management and risk bearing-are treated as naturally separate factors
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dividend policy does not matter to the shareholders under ideal conditions. It may be worth noting that a crucial requirement here, following from ideal conditions, is that the investors and the firm both earn interest on financial assets at the same rate. 3. Year 1 At time 0, you know that if the bad economy state is realized, ex post net income for year 1 will be a loss of $23.97. If the good economy state is realized, ex post net income
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Study Session 2 - Ethical and Professional Standards: Application Self-Test - Ethical and Professional Standards ....................... 110 128 138 256 262 339 344 349 358 ..................................................... Study Session 3 - Quantitative Methods for Valuation Self-Test - Quantitative Methods for Valuation Study Session 4 - Economics for Valuation Self-Test - Economics for Valuation Formulas ........................................ ...............................
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have been cited, including lax regulation over mortgage lending, a growing housing bubble, the rise of derivatives instruments such as collaterized debt obligations, and questionable banking practices. In addition to these and many other reasons, we explain two factors that partially contributed to the crisis: certain management incentives and fair value accounting standards. This article discusses the causes of the financial crisis, with particular focus on
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END-OF-CHAPTER QUESTIONS AND PROBLEMS TABLE OF CONTENTS Chapter 1. Globalization and the Multinational Firm Suggested Answers to End-of-Chapter Questions 3 2. International Monetary System Suggested Answers and Solutions to End-of-Chapter Questions and Problems 12 3. Balance of Payments Suggested Answers and Solutions to End-of-Chapter Questions and Problems 17 4. The Market for Foreign Exchange Suggested Answers and Solutions to End-of-Chapter Questions
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