The Structure of the US Equity Markets

In 1975, Congress directed the SEC to develop a national market system in which all orders to buy or sell equities would interact. A national market system abhors fragmentation and assumes that one market will best serve the needs of all investors. Such an assumption does not capture the realities of modern markets. Investors have different needs and different markets will develop to serve these needs. Markets are non anonymous, and in such markets, the very concept of “best price” is not defined. Fragmented markets are a natural result of competition. Within the US, the sharing of trade and quote information among markets helps to mitigate any deleterious effects of fragmentation. The markets of tomorrow will be global. In a global market, the SEC will have to give up its goal of a national market system and focus on other issues. For example, it will be a challenge to provide just the sharing of trade information across borders. Further, technology will allow a market center or order-gathering function to be located anywhere in the world. This threat of relocation will place constraints on US regulators, and global trading will make it more difficult for US authorities to regulate investment practices and to protect US investors.

Stale or Sticky Stock Prices? Non-Trading, Predictability, and Mutual Fund Returns

The observed predictability in indexes and domestic mutual funds has been attributed to stale prices. Market timing of mutual funds exploits this predictability. We show that there are few stale prices for stocks in the top few deciles of market value and that mutual funds concentrate their holding in these deciles. Still, we observe predictability in the returns of portfolios and mutual funds holding these stocks. Much of this predictability is due to stickiness, or momentum, in market returns and not stale prices. Thus, the often suggested use of “fairvalue” accounting will not eliminate the profitability of market timing

The Valuation of Callable Bonds

Callable bond indentures contain provisions that allow the issuing entity to retire the bond at a predetermined price before the maturity of the bond.1 As such a callable bond is often viewed as a combination of an otherwise identical but non-callable bond and an option to call that bond. The writer of the call option is the holder of the bond, and the buyer of the call is the stockholder of the issuing corporation. Thus, the price of a callable bond is the value of the straight bond less the value of the call provision

Returns and Volatility of Low-Grade Bonds 1977–1989

This paper examines the risks and returns of long-term low-grade bonds for the period 1977–1989. We find: (1) low-grade bonds realized higher returns than higher-grade bonds and lower returns than common stocks, and low-grade bonds exhibited less volatility than higher-grade bonds due to their call features and high coupons; (2) there is no relation between the age of low-grade bonds and their realized returns; cyclical factors explain much of the observed relation between default rates and bond age; and (3) low-grade bonds behave like both bonds and stocks. Despite this complexity there is no evidence that low-grade bonds are systematically over- or under-priced

Decreased hippocampal translocator protein (18 kDa) expression in alcohol dependence: a [11C]PBR28 PET study

Repeated withdrawal from alcohol is clinically associated with progressive cognitive impairment. Microglial activation occurring during pre-clinical models of alcohol withdrawal is associated with learning deficits. We investigated whether there was microglial activation in recently detoxified alcohol-dependent patients (ADP), using [11C]PBR28 positron emission tomography (PET), selective for the 18kDa translocator protein (TSPO) highly expressed in activated microglia and astrocytes. We investigated the relationship between microglial activation and cognitive performance. Twenty healthy control (HC) subjects (45±13; M:F 14:6) and nine ADP (45±6, M:F 9:0) were evaluated. Dynamic PET data were acquired for 90 min following an injection of 331±15 MBq [11C]PBR28. Regional volumes of distribution (VT) for regions of interest (ROIs) identified a priori were estimated using a two-tissue compartmental model with metabolite-corrected arterial plasma input function. ADP had an ~20% lower [11C]PBR28 VT, in the hippocampus (F(1,24) 5.694; P=0.025), but no difference in VT in other ROIs. Hippocampal [11C]PBR28 VT was positively correlated with verbal memory performance in a combined group of HC and ADP (r=0.720, P<0.001), an effect seen in HC alone (r=0.738; P=0.001) but not in ADP. We did not find evidence for increased microglial activation in ADP, as seen pre-clinically. Instead, our findings suggest lower glial density or an altered activation state with lower TSPO expression. The correlation between verbal memory and [11C]PBR28 VT, raises the possibility that abnormalities of glial function may contribute to cognitive impairment in ADP

The handbook for standardised field and laboratory measurements in terrestrial climate-change experiments and observational studies

Climate change is a worldwide threat to biodiversity and ecosystem structure, functioning, and services. To understand the underlying drivers and mechanisms, and to predict the consequences for nature and people, we urgently need better understanding of the direction and magnitude of climate‐change impacts across the soil–plant–atmosphere continuum. An increasing number of climate‐change studies is creating new opportunities for meaningful and high‐quality generalisations and improved process understanding. However, significant challenges exist related to data availability and/or compatibility across studies, compromising opportunities for data re‐use, synthesis, and upscaling. Many of these challenges relate to a lack of an established “best practice” for measuring key impacts and responses. This restrains our current understanding of complex processes and mechanisms in terrestrial ecosystems related to climate change