Capital Asset Prices With and Without Negative Holding

Prize Lecture to the memory of Alfred Nobel, December 7, 1990.Finance;

Bank Capital Adequacy, Deposit Insurance and Security Values, Part I

This paper provides a formal setting for the analysis of the capital adequacy of an institution with deposits insured by a third party. An insured depositor has a claim against the institution and a contingent claim against the insurer. This paper analyzes the effect of the riskiness of the asset mix and the relative amount of deposits and capital on the potential liability of the insurer. It shows that an increase in asset risk, holding value constant, increases the value of equity and raises the potential liability of the insurer.

Perspective on Bank Capital Adequacy: Time-Series Analysis

The first part of this paper provides a historical perspective on bank risks. Five-year moving average measures of total risk, market risk, and nonmarket risk are computed for an index of New York banks from 1929-1975 and for an index of outside New York banks from 1950-1976.We use a carefully constructed series of bank balance sheet data to compute correlations among various components of New York banks' port-folios and observe trends over time. The time series relationship between book values and market values is investigated, and classical measures of capital adequacy are calculated using surrogates for market values rather than book values. Finally, data are presented on the movement of interest rates and the term structure over time. Serial correlations and cross-correlations are computed. The second part of the paper uses the technique proposed in Sharpe ("Bank Capital Adequacy, Deposit Insurance and Security Values," June 1978) to gain information about capital adequacy. He has shown that for a bank with deposit liabilities that do not extend beyond the review period a "value preserving spread" in asset risk is likely to increase the value of capital. Moreover, the less adequate the capital, the larger this effect should be. We outline the method used to develop an econometric model to test for this effect. The model is then applied to time series data from 1938 to 1975.

Prostaglandins, masculinization and its disorders:effects of fetal exposure of the rat to the cyclooxygenase inhibitor- indomethacin

Recent studies have established that masculinization of the male reproductive tract is programmed by androgens in a critical fetal ‘masculinization programming window’ (MPW). What is peculiar to androgen action during this period is, however, unknown. Studies from 20 years ago in mice implicated prostaglandin (PG)-mediation of androgen-induced masculinization, but this has never been followed up. We therefore investigated if PGs might mediate androgen effects in the MPW by exposing pregnant rats to indomethacin (which blocks PG production by inhibiting cyclooxygenase activity) during this period and then examining if androgen production or action (masculinization) was affected. Pregnant rats were treated with indomethacin (0.8 mg/kg/day; e15.5–e18.5) to encompass the MPW. Indomethacin exposure decreased fetal bodyweight (e21.5), testis weight (e21.5) and testicular PGE2 (e17.5, e21.5), but had no effect on intratesticular testosterone (ITT; e17.5) or anogenital index (AGI; e21.5). Postnatally, AGI, testis weight and blood testosterone were unaffected by indomethacin exposure and no cryptorchidism or hypospadias occurred. Penis length was normal in indomethacin-exposed animals at Pnd25 but was reduced by 26% (p<0.001) in adulthood, an effect that is unexplained. Our results demonstrate that indomethacin can effectively decrease intra-testicular PGE2 level. However, the resulting male phenotype does not support a role for PGs in mediating androgen-induced masculinization during the MPW in rats. The contrast with previous mouse studies is unexplained but may reflect a species difference

Response to Emerging Infection Leading to Outbreak of Linezolid-Resistant Enterococci

These bacteria have emerged as a hospital problem that appears to be caused by both linezolid exposure and patient-to-patient transmission