Discounting Rules for Risky Assets

This paper develops a rule for calculating a discount rate to value risky projects. The rule assumes that asset risk can be measured by a single index (e.g., beta), but makes no other assumptions about specific forms of the asset pricing model. It treats all projects as combinations of two assets: Treasury bills and the market portfolio. We know how to value each of these assets under any theory of debt and taxes and under any assumption about the slope and intercept of the market line for equity securities. Our discount rate is a weighted average of the after-tax return on riskless debt and the expected return on the portfolio, where the weight on the market portfolio is beta.

I refer to the editorial cartoon

Letter to the editor about an editorial cartoon apparently criticizing the censorship of art in the Soviet Union, shortly after an incident of artistic censorship on the campus of the University of Mississippi; Source: unknown; Unknown datehttps://egrove.olemiss.edu/jws_clip/1300/thumbnail.jp

Discounting rules for risky assets

This paper develops a rule for calculating a discount rate to value risky projects. The rule assumes that the asset risk can be measured by a single index (e.g., beta), but makes no other assumptions about specific form of the asset pricing model. The rule works for all equilibrium theories of debt and taxes. The rule works because it treats all projects as combinations of two assets: Treasury bills and the market portfolio. We know how to value each of these assets under any theory of debt and taxes and under any assumption about the slope and intercept of the market line for equity securities. Given the corporate tax rate, the interest rate on Treasury bills, and the expected rate of return on the market, we can calculate the cost of capital for a feasible financing strategy. The firm finances the project with equity and debt in the proportions beta and (1- beta). Value increasing projects could be completely financed using this strategy. The weighted average cost of financing this project provides a discount rate that values the project correctly

Discounting rules for risky assets

This paper develops a new rule for calculating the discount rate to value risky projects. The rule works under any linear asset pricing model and any equilibrium theory of debt and taxes. If securities are priced by the standard capital asset pricing model, the discount rate is a weighted average of the after-tax Treasury rate and the expected rate of return on the market portfolio, where the weight on the market portfolio is the project beta. We prove that this discount rate gives the correct project value and explain why it works. We also recast the rule in certainty equivalent form, restate it for multifactor capital asset pricing or arbitrage pricing models, and derive implications for the valuation of real options

Real-time simulation and control systems design by the Response Surface Methodology and designed experiments

This paper examines two cases where the fitting of a model to experimental data makes possible the solution of extremely difficult design and simulation problems. In the first (aerospace) case, designed experiments were conducted on a permanent magnet AC motor which provided the motive power for a flight surface actuator in a more electric aircraft application. The Response Surface Methodology is applied to the measured data to achieve inclusion of the component in a real-time distributed aircraft simulation. In the second (automotive) case, oscillatory acceleration responses are controlled via an electronically actuated (drive by wire) throttle. Designed experiments were conducted on the test vehicle to achieve a systematic excitation of the vehicle driveline. An approximation to the measured data is achieved by the Response Surface Methodology allowing a controller to be designed extremely rapidly

Cytosolic Prion Protein (PrP) Is Not Toxic in N2a Cells and Primary Neurons Expressing Pathogenic PrP Mutations

Inherited prion diseases are linked to mutations in the prion protein (PrP) gene, which favor conversion of PrP into a conformationally altered, pathogenic isoform. The cellular mechanism by which this process causes neurological dysfunction is unknown. It has been proposed that neuronal death can be triggered by accumulation of PrP in the cytosol because of impairment of proteasomal degradation of misfolded PrP molecules retrotranslocated from the endoplasmic reticulum (Ma, J., Wollmann, R., and Lindquist, S. (2002) Science 298, 1781-1785). To test whether this neurotoxic mechanism is operative in inherited prion diseases, we evaluated the effect of proteasome inhibitors on the viability of transfected N2a cells and primary neurons expressing mouse PrP homologues of the D178N and nine octapeptide mutations. We found that the inhibitors caused accumulation of an unglycosylated, aggregated form of PrP exclusively in transfected N2a expressing PrP from the cytomegalovirus promoter. This form contained an uncleaved signal peptide, indicating that it represented polypeptide chains that had failed to translocate into the ER lumen during synthesis, rather than retrogradely translocated PrP. Quantification of N2a viability in the presence of proteasome inhibitors demonstrated that accumulation of this form was not toxic. No evidence of cytosolic PrP was found in cerebellar granule neurons from transgenic mice expressing wild-type or mutant PrPs from the endogenous promoter, nor were these neurons more susceptible to proteasome inhibitor toxicity than neurons from PrP knock-out mice. Our analysis fails to confirm the previous observation that mislocation of PrP in the cytosol is neurotoxic, and argues against the hypothesis that perturbation of PrP metabolism through the proteasomal pathway plays a pathogenic role in prion diseases

Spectral characteristics for a spherically confined -1/r + br^2 potential

We consider the analytical properties of the eigenspectrum generated by a class of central potentials given by V(r) = -a/r + br^2, b>0. In particular, scaling, monotonicity, and energy bounds are discussed. The potential $V(r)$ is considered both in all space, and under the condition of spherical confinement inside an impenetrable spherical boundary of radius R. With the aid of the asymptotic iteration method, several exact analytic results are obtained which exhibit the parametric dependence of energy on a, b, and R, under certain constraints. More general spectral characteristics are identified by use of a combination of analytical properties and accurate numerical calculations of the energies, obtained by both the generalized pseudo-spectral method, and the asymptotic iteration method. The experimental significance of the results for both the free and confined potential V(r) cases are discussed.Comment: 16 pages, 4 figure

Mutant PrP is delayed in its exit from the endoplasmic reticulum, but neither wild-type nor mutant PrP undergoes retrotranslocation prior to proteasomal degradation

The cellular mechanisms by which prions cause neurological dysfunction are poorly understood. To address this issue, we have been using cultured cells to analyze the localization, biosynthesis, and metabolism of PrP molecules carrying mutations associated with familial prion diseases. We report here that mutant PrP molecules are delayed in their maturation to an endoglycosidase H-resistant form after biosynthetic labeling, suggesting that they are impaired in their exit from the endoplasmic reticulum (ER). However, we find that proteasome inhibitors have no effect on the maturation or turnover of either mutant or wild-type PrP molecules. Thus, in contrast to recent studies from other laboratories, our work indicates that PrP is not subject to retrotranslocation from the ER into the cytoplasm prior to degradation by the proteasome. We find that in transfected cells, but not in cultured neurons, proteasome inhibitors cause accumulation of an unglycosylated, signal peptide-bearing form of PrP on the cytoplasmic face of the ER membrane. Thus, under conditions of elevated expression, a small fraction of PrP chains is not translocated into the ER lumen during synthesis, and is rapidly degraded in the cytoplasm by the proteasome. Finally, we report a previously unappreciated artifact caused by treatment of cells with proteasome inhibitors: an increase in PrP mRNA level and synthetic rate when the protein is expressed from a vector containing a viral promoter. We suggest that this phenomenon may explain some of the dramatic effects of proteasome inhibitors observed in other studies. Our results clarify the role of the proteasome in the cell biology of PrP, and suggest reasonable hypotheses for the molecular pathology of inherited prion diseases

Patient preferences and willingness-to-pay for a home or clinic based program of chronic heart failure management: findings from the which? trial

BACKGROUND Beyond examining their overall cost-effectiveness and mechanisms of effect, it is important to understand patient preferences for the delivery of different modes of chronic heart failure management programs (CHF-MPs). We elicited patient preferences around the characteristics and willingness-to-pay (WTP) for a clinic or home-based CHF-MP. METHODOLOGY/PRINCIPAL FINDINGS A Discrete Choice Experiment was completed by a sub-set of patients (n = 91) enrolled in the WHICH? trial comparing home versus clinic-based CHF-MP. Participants provided 5 choices between hypothetical clinic and home-based programs varying by frequency of nurse consultations, nurse continuity, patient costs, and availability of telephone or education support. Participants (aged 71±13 yrs, 72.5% male, 25.3% NYHA class III/IV) displayed two distinct preference classes. A latent class model of the choice data indicated 56% of participants preferred clinic delivery, access to group CHF education classes, and lower cost programs (p<0.05). The remainder preferred home-based CHF-MPs, monthly rather than weekly visits, and access to a phone advice service (p<0.05). Continuity of nurse contact was consistently important. No significant association was observed between program preference and participant allocation in the parent trial. WTP was estimated from the model and a dichotomous bidding technique. For those preferring clinic, estimated WTP was ≈AU$9-20 per visit; however for those preferring home-based programs, WTP varied widely (AU$15-105). CONCLUSIONS/SIGNIFICANCE Patient preferences for CHF-MPs were dichotomised between a home-based model which is more likely to suit older patients, those who live alone, and those with a lower household income; and a clinic-based model which is more likely to suit those who are more socially active and wealthier. To optimise the delivery of CHF-MPs, health care services should consider their patients’ preferences when designing CHF-MPs.Jennifer A. Whitty, Simon Stewart, Melinda J. Carrington, Alicia Calderone, Thomas Marwick, John D. Horowitz, Henry Krum, Patricia M. Davidson, Peter S. Macdonald, Christopher Reid, Paul A. Scuffha

Psychological States Underlying Excellent Performance in Sport: Toward an Integrated Model of Flow and Clutch States

This study investigated the psychological states underlying excellent performance in 26 athletes (Mage = 29 years, SD = 7.7) across a range of sports (team, net/wall, sprint, endurance, adventure) and standards (world class to recreational). Participants were primarily interviewed on average 4 days after excellent performances. The data were analyzed thematically. Distinct states of flow and clutch were reported, each of which occurred through separate contexts and processes, while athletes also transitioned between states during performance. These findings extend current knowledge of the psychology of excellent performance and are discussed in terms of implications for future research and applied practice