How Big is the Tax Advantage to Debt?

This paper uses an option valuation model of the firm to answer the question, "What magnitude tax advantage to debt is consistent with the range of observed corporate debt ratios?" We incorporate into the model differential personal tax rates on capital gains and ordinary income. We conclude that variations in the magnitude of bankruptcy costs across firms can not by itself account for the simultaneous existence of levered and unlevered firms. When it is possible for the value of the underlying assets to junip discretely to zero, differences across firms in the probability of this jump can account for the simultaneous existence of levered and unlevered firms. Moreover, if the tax advantage to debt is small, the annual rate of return advantage offered by optimal leverage may be so small as to make the firm indifferent about debt policy over a wide range of debt-to-firm value ratios.

Debt Policy and the Rate of Return Premium to Leverage

Equilibrium in the market for real assets requires that the price of those assets be bid up to reflect the tax shields they can offer to levered firms.Thus there must be an equality between the market values of real assets and the values of optimally levered firms. The standard measure of the advantage to leverage compares the values of levered and unlevered assets, and can be misleading and difficult to interpret. We show that a meaningful measure of the advantage to debt is the extra rate of return, net of a market premium for bankruptcy risk, earned by a levered firm relative to an otherwise-identical unlevered firm. We construct an option valuation model to calculate such a measure and present extensive simulation results. We use this model to compute optimal debt maturities, show how this approach can be used for capital budgeting, and discuss its implications for the comparison of bankruptcy costs versus tax shields.

Best possible densities of Dickson m-tuples, as a consequence of Zhang-Maynard-Tao

We determine for what proportion of integers $h$ one now knows that there are infinitely many prime pairs $p,\ p+h$ as a consequence of the Zhang-Maynard-Tao theorem. We consider the natural generalization of this to $k$-tuples of integers, and we determine the limit of what can be deduced assuming only the Zhang-Maynard-Tao theorem.Comment: 9 pages. Final version. Some minor changes, Analytic Number Theory - In Honor of Helmut Maier's 60th Birthday, Springer, 201

Solid-state non-planar internally reflecting ring laser

A solid-state non-planar internally-reflecting ring laser is described including a single piece of solid state laser material which incorporates at least two mirrored surfaces oriented to change the plane of incidence of the propagating ray path to define a ray path having at least four segments defining at least two planes, when the prism is located in a magnetic field of sufficient strength, the laser will lase in a single longitudinal and transverse mode, the magnetic field decoupling the counter propagating waves

Roundtable discussion: reflection on twenty years of bank regulatory reform

In 1986 the American Bankers Association asked five banking academics to assess and recommend policy options to improve the banking system's efficiency, performance, and safety. The report these five economists produced, Perspectives on Safe and Sound Banking: Past, Present, and Future, has in many ways served as a roadmap for ensuing bank regulatory reforms. In this roundtable discussion, each of the five authors reflects on the past twenty years and the current status of the banking industry and, in some cases, shares thoughts about the industry's future direction.Banks and banking ; Bank supervision

In Service of Mission: Assessing Catholic School Guidance Counselors

Catholic schools are set apart from public schools in that Catholic schools aim to create for the school community an atmosphere enlivened by the Gospel spirit of freedom and charity. Those who serve in Catholic schools, therefore, need to understand their role as unique, that is, faith driven. The purpose of this study was to assess this uniqueness as understood and practiced by Catholic school counselors. The findings of this study note positive trends among Catholic school counselors, particularly in terms of academic preparation and training as well as some incorporation of Catholic identity and mission into their ministry with students. Among these findings, the most significant is that Catholic school counselors need to incorporate the identity and unique mission of the Catholic Church more effectively into their work with students, parents, teachers, and administrators. Beginning with the hiring interview and the orientation process, Catholic school counselors must make a conscious effort to thread the Catholic identity, as it is embodied in the school\u27s unique mission, into their guidance programs, thereby distinguishing what they do as a ministry rather than a job

Diode end pumped laser and harmonic generator using same

A second harmonic, optical generator is disclosed in which a laser diode produces an output pumping beam which is focused by means of a graded, refractive index rod lens into a rod of lasant material, such as Nd:YAG, disposed within an optical resonator to pump the lasant material and to excite the optical resonator at a fundamental wavelength. A non-linear electro-optic material such as MgO:LiNbO.sub.3 is coupled to the excited, fundamental mode of the optical resonator to produce a non-linear interaction with the fundamental wavelength producing a harmonic. In one embodiment, the gain medium and the non-linear material are disposed within an optical resonator defined by a pair of reflectors, one of which is formed on a face of the gain medium and the second of which is formed on a face of the non-linear medium. In another embodiment, the non-linear, electro-optic material is doped with the lasant ion such that the gain medium and the non-linear doubling material are co-extensive in volume. In another embodiment, a non-linear, doubling material is disposed in an optical resonator external of the laser gai medium for improved stability of the second harmonic generation process. In another embodiment, the laser gain medium andthe non-linear material are bonded together by means of an optically transparent cement to form a mechanically stable, monolithic structure. In another embodiment, the non-linear material has reflective faces formed thereon to define a ring resonator to decouple reflections from the non-linear medium back to the gain medium for improved stability

Prevention of Depression and Anxiety Symptoms in Adolescents: 42 and 54 Months Follow-Up of the Aussie Optimism Program-Positive Thinking Skills

Anxiety and depression are the most commonly reported mental health problems amongst Australian children and adolescents. The Aussie Optimism: Program-Positive Thinking Skills (AOP-PTS) is a universal intervention program based on cognitive and behavioral strategies and aimed to prevent anxiety and depression in the middle primary school children aged 9–10 years old. 370 students randomly assigned to the intervention and control condition participated in the 42 and 54 months follow-up study. The intervention group received the AOP-PTS 10-week program and the control group received the regular health education curriculum. Students were assessed on anxiety, depression and attribution style at school whilst parents reported on their child’s externalizing and internalizing problems at home. Results showed there were no significant reductions across groups in the depressive and anxiety symptoms, and attribution style at either 42 or 54 months follow-up. These findings suggest that AOP-PTS has short and medium term effects but were not sustained in longer term period. Future strategies to achieve the desirable outcomes in a longitudinal study are discussed

Evidence of Improved Monitoring and Insolvency Resolution after FDICIA

To realign supervisory and market incentives, the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) adjusts two principal features of federal banking supervision. First, it requires regulators to examine insured institutions more frequently and makes them accountable for exercising their supervisory powers. Second, the Act empowers regulators to wind up the affairs of troubled institutions before their accounting net worth is exhausted. Using 1984–2003 data on the outcome of individual bank examinations, this paper documents that the frequency of rating transitions and the character of insolvency resolutions have changed substantially under FDICIA. The average interval between bank examinations has dropped for low-rated banks in the post-FDICIA era. Examiner upgrades have become significantly more likely in the post-FDICIA era even after controlling for the state of the economy. However, in recessions managers are slower to correct problems that examiners identify. As a result, during downturns upgrades become less likely and absorptions become more likely. Giving the FDIC authority to wind up troubled banks before their tangible net worth is exhausted has reduced the role of government in the insolvency-resolution process. Consistent with an hypothesis that FDICIA has improved incentives, our data show that a markedly larger percentage of troubled banks now search for a merger partner rather than trying to stay in business until the regulators force them to fail. This greater reliance on quasi-voluntary mergers is observable both within and across various stages of the business cycle. These findings suggest that supervisory interventions became more effective at banks during the post-FDICIA era.

The Efficacy of the Enhanced Aussie Optimism Positive Thinking Skills Program in Improving Social and Emotional Learning in Middle Childhood

The aim of the current study was to investigate the effects of the modified and enhanced Aussie Optimism Positive Thinking Skills Program (AO-PTS) on Year 4 and 5 children’s social and emotional learning (SEL) skills. AO-PTS is a universal-school based program that is implemented by class teachers as part of regular school curricula and was developed for the prevention of depression and anxiety. The study comprised a total of 683 Year 4 and 5 students from 10 private primary schools in Western Australia. Students were assessed on two subscales of emotional attribution at school whilst parents reported on their children’s externalising and internalising problems outside of school and at home. Two analyses were conducted: seven intervention schools were assessed at pre- and post-test (Analysis 1) and three intervention schools matched with three control schools were compared and assessed respectively (Analysis 2). Results from Analysis 1 showed that the intervention children had increased in their overall emotional attribution accuracy and decreased in total difficulties and hyperactivity; Results from Analysis 2 revealed no intervention effect on emotional attribution accuracy or internalising or externalising problems. These findings suggest that the enhanced AO-PTS’s effects on SEL were not evident in short-term period after intervention. Discussion of the non-significant findings and future directions for AO-PTS research and program modification were discussed