Preface - credit derivatives: where's the risk?

This interview, conducted shortly after the Atlanta Fed's 2007 Financial Markets Conference, discusses credit derivatives and their importance to the market and outlines key themes of the conference.Credit derivatives ; Risk

Mutual funds: temporary problem or permanent morass?

The improprieties in the mutual fund industry that surfaced in the fall of 2003 prompted the passage and drafting of legislation and regulations that cover nearly every facet of mutual fund pricing and operations. While this regulatory flurry is clearly intended to protect shareholders’ interests, the question remains: How will these scandals and regulatory changes ultimately affect mutual fund investors? ; When considering the problems inherent in mutual fund management and the best ways to address them, it is important, the author stresses, to understand current business practices in the industry, who these benefit, and why they exist. ; Mutual fund investors, the author explains, are legally considered owners of a company that pools the investment capital of many investors. In practice, however, investors are often viewed (and often view themselves) as customers of a management firm that acts as an investment adviser. ; Regardless of which view is taken, inherent conflicts exist between investors and advisers because the two parties have differing objectives: Investors want to receive higher returns on their investment while minimizing risk, and advisers want to maximize their own profits without exerting undue efforts (costs). ; The author reviews a number of possible solutions to these conflicts of interest, including compensation-based fee structures, a separation of functions, proposed regulatory and legislative changes, and monitoring and information disclosure. ; By far the strongest weapon investors have in resolving these conflicts is their own demand, the author concludes. “When unfettered and free of frictions, a competitive marketplace will supply the products and services investors demand at the lowest possible price,” she notes.Mutual funds

Annotated List of Stoneflies (Plecoptera) from Stebbins Gulch in Northeastern Ohio

(excerpt) Stebbins Gulch is situated within property owned by The Holden Arboretum in northwestern Geauga County, Ohio, approximately 8.0 km east of the village of Kirtland (Fig. 1). Physiographically, the Arboretum is included within the Southern New York Section of the Appalachian Plateau Province (Feldman et al., 1977). This Section was overridden by several advances of Pleistocene glaciation, the latest of which receded some 13,000 years ago. It is characterized by poorly drained surfaces containing many bogs, ponds, and lakes, except near the Portage Escarpment where small rivers have excavated relatively deep valleys

The financial crisis of 2008 in fixed income markets

We explore how a relatively small amount of heterogeneous securities created turmoil in financial markets in much of the world in 2007 and 2008. The drivers of the financial turmoil and the financial crisis of 2008 were heterogeneous securities that were hard to value. These securities created concerns about counterparty risk and ultimately created substantial uncertainty. The problems spread in ways that were hard to see in advance. The run on prime money market funds in September 2008 and the effects on commercial paper were an important aspect of the crisis itself and are discussed in some detail.

The determinants of the flow of funds of managed portfolios: mutual funds versus pension funds

Due to differences in financial sophistication and agency relationships, we posit that investors use different criteria to select portfolio managers in the retail mutual fund and fiduciary pension fund industry segments. We provide evidence on investors’ manager selection criteria by estimating the relation between manager asset flow and performance. We find that pension fund clients use quantitatively sophisticated measures like Jensen’s alpha, tracking error, and outperformance of a market benchmark. Pension clients also punish poorly performing managers by withdrawing assets under management. In contrast, mutual fund investors use raw return performance and flock disproportionately to recent winners but do not withdraw assets from recent losers. Mutual fund manager flow is significantly positively related to Jensen’s alpha, a seemingly anomalous result in light of a relatively unsophisticated mutual fund client base. We provide preliminary evidence, however, that this relation is driven by a high correlation between Jensen’s alpha and widely available summary performance measures, such as Morningstar’s star rating. By documenting differences in the flow-performance relation, we contribute to the growing literature linking fund manager behavior to the implicit incentives to increase assets under management. We show that several forces combine to weaken the incentive for pension fund managers to engage in the type of risk-shifting behavior identified in the mutual fund literature.Mutual funds ; Pensions ; Investments

Star power: the effect of Morningstar ratings on mutual fund flows

Morningstar, Inc., has been hailed in both academic and practitioner circles as having the most influential rating system in the mutual fund industry. We investigate Morningstar’s influence by estimating the value of a star in terms of the asset flow it generates for the typical fund. We use event-study methods on a sample of 3,388 domestic equity mutual funds from November 1996 to October 1999 to isolate the “Morningstar effect” from other influences on fund flow. ; We separately study initial rating events, whereby a fund is rated for the first time on its 36-month anniversary, and rating change events. An initial five-star rating results in average six-month abnormal flow of $26 million, or 53 percent above normal expected flow. Following rating changes, we find economically and statistically significant abnormal flow in the expected direction, positive for rating upgrades and negative for rating downgrades. Furthermore, we observe an immediate flow response, suggesting that some investors vigilantly monitor this information and view the rating change as “new” information on fund quality. Overall, our results indicate that Morningstar ratings have unique power to affect asset flow.Mutual funds

You look just like her

You Look Just Like Her is a process-based photographic installation exploring the limitations of any one media as a means to build a complete narrative. When I discovered that little accurate information could be gleaned about my deceased mother from her collection of family photographs, I interviewed the other participants in the visual family histories. Once the stories were complete, I transformed the visual truth into a fiction of my own by using digital manipulation to become a by-proxy participant in the early years of my mother\u27s life. In order to create an panoptic experience for the viewer, this thesis presents an altered visual history combined with an aural history, which are merged through repurposed digital technologies

Basement Heart

Basement Heart is a collection of short stories with a goal of documenting the manifestations of rage and how it evolves throughout a woman’s life. In these stories, femininity is explored through the aesthetics of the grotesque. Female protagonists seek to inhabit new definitions of female sexuality that combat tired expectations made by society’s misogynistic and objectifying culture. Often, their feelings of unprovoked grief manifest themselves as pursuits of the flesh, which becomes the underlying heartbeat of each story; themes revolve around sex and obsession and explore what happens when sexual fantasies are realized and lived out in the real world. When characters inhabit their bodies in ways that American culture tells women not to, they become viscerally self-aware and better their understanding of what they want. And doing what they want is all these women care about. The characters in Basement Heart are angry, restless, and at times driven mad by their own lust for control

Non-enzymatic glycation of synthetic microtissues for three-dimensional diabetic wound healing

BACKGROUND: Diabetes is a worldwide epidemic, and the number of those affected is only growing. Diabetes is characterized by hyperglycemia due to the body’s inability to produce or properly use insulin. Hyperglycemia contributes to diabetic complications in several ways, one of which is promoting glycation. Glycation is the non-enzymatic glucosylation of proteins, and because glycation is adventitious, the process most commonly occurs on proteins with long half-lives, such as collagen. Glycation greatly changes collagen’s mechanical and biochemical properties. Glycation leads to the production of advanced glycation end products (AGEs) that have been shown to contribute to the complications seen in diabetes in one of two ways: establishment of crosslinks between molecules in the basement membrane of the extracellular matrix, altering cellular function, or interactions between AGEs and AGE receptors on the cell surface. Diabetes greatly impairs the body’s ability to heal wounds, and it is thought that the AGEs produced by glycation greatly contribute this phenomenon. However, it is not fully understood, what direct role AGEs and glycated collagen plays in the wound healing process. Three-dimensional microtissue models have been developed for the purpose of studying wound healing, and the creation of a three-dimensional microtissue with glycated collagen allows for investigation into the specific role that glycated collagen plays on both the mechanical and biochemical properties of the wound closure and the healing process. METHODS: In order to study the effect of glycated collagen on wound healing, a protocol to make glycated collagen must first be developed. To make glycated collagen, soluble rat-tail type I collagen will be incubated with 250mM ribose at 4°C for a minimum of five days to allow the collagen to become glycated. The glycated collagen will be used to make a collagen gel, and then papain buffer will digest the gel. The extent of glycation will be determined through quantifying the digested glycated collagen gel’s autofluorescence, absorbance, and changes that can be perceived visually. Once it is confirmed that the collagen has been glycated, it will be incorporated into a microtissue model based on a previously published protocol. The microtissue will then be wounded with a micromanipulator and 16-gauge needle, and visualized via time-lapse microscopy. The rate at which the wound closes will be compared in microtissues made with glycated collagen to those made with non-glycated collagen. RESULTS: Glycation of collagen was unable to be confirmed consistently by measuring the autofluorescence of the collagen gel digests. However, the absorbance of the collagen gel digest was used to determine that the collagen was 43.16% glycated and visual changes in the collagen gels made with glycated collagen was also observed. Microtissues were able to successfully form with the glycated collagen, and were able to be used to compare wound healing in normal microtissues against those made with glycated collagen

High-Speed Wind-Tunnel Tests of a Twin-Fuselage Pursuit Airplane

At the request of the Air Technical Service Command, U.S. Army Air Forces, a 0.22-scale model of a twin-fuselae pursuit airplane was built and tested at the Ames Aeronautical Laboratory. The tests of this model were made in order that the aerodynamic characteristics of the airplane, especially at high speed, might be predicted. The results shown in this report consist of force data for the model and critical Mach numbers of parts of the model as determined from pressure-distribution measurements. The results indicate that a diving tendency of the airplane can be expected at Mach numbers above 0.70 at lift co-efficients from 0 to 0.4. There is an indication that the Mach number at which the airpolane would first experience a diving tendency for lift coefficients from 0 to 0.2 can be increased if the critical speed of the radiator enclosures is increased, and the wing-fuselage-juncture fillets are improved