Cryptanalysis of SIGABA

SIGABA is a World War II cipher machine used by the United States. Both the United States Army and the United States Navy used it for tactical communication. In this paper, we consider an attack on SIGABA using the largest practical keyspace for the machine. This attack will highlight the strengths and weaknesses of the machine, as well as provide an insight into the strength of the security provided by the cipher

A New Look at Copper Markets: A Regime-Switching Jump Model

GARCH-jump models of metal price returns, while allowing for sudden movements (jumps), apply the same specification of the jump component in both 'bear'and 'bull' markets. As a result, the more frequent but relatively small jumps that occur in both bear and bull markets dominate the characterization of the jump process. Given that large jumps, although less frequent, are still quite common in copper (and other metal) markets, this is a potential shortcoming of current models. More flexibility can be added to the modeling process by allowing for regime-switching. In this paper we specify a model that allows for switching across two separate regimes, with the possibility of different jump sizes and frequencies under each regime, along with a regime-specific GARCH process for the conditional variance. This model is applied to daily copper futures prices over the period of January 2 1980 through the end of July 2007. The model is estimated both with and without factors such as interest and exchange rate movements entering into the specification of the state-dependent mean of the conditional jump size. In some respects, a Regime Switching GARCH-Jump Model performs well when applied to the copper returns data. The results are mixed in terms of whether or not variations of the model that allow jump sizes to be a function of interest or exchange rates offer much of an advantage over a pure time series approach to the modeling of copper returns over the past three decades.regime switching; Poisson jump; GARCH volatility; copper futures

Prospect and Markowitz Stochastic Dominance

Levy and Levy (2002, 2004) develop the Prospect and Markowitz stochastic dominance theory with S-shaped and reverse S-shaped utility functions for investors. In this paper, we extend Levy and Levy's Prospect Stochastic Dominance theory (PSD) and Markowitz Stochastic Dominance theory (MSD) to the first three orders and link the corresponding S-shaped and reverse S-shaped utility functions to the first three orders. We also provide experiments to illustrate each case of the MSD and PSD to the first three orders and demonstrate that the higher order MSD and PSD cannot be replaced by the lower order MSD and PSD. Prospect theory has been regarded as a challenge to the expected utility paradigm. Levy and Levy (2002) prove that the second order PSD and MSD satisfy the expected utility paradigm. In our paper we take Levy and Levy's results one step further by showing that both PSD and MSD of any order are consistent with the expected utility paradigm. Furthermore, we formulate some other properties for the PSD and MSD including the hierarchy that exists in both PSD and MSD relationships; arbitrage opportunities that exist in the first orders of both PSD and MSD; and that for any two prospects under certain conditions, their third order MSD preference will be ???the opposite??? of or ???the same??? as their counterpart third order PSD preference. By extending Levy and Levy's work, we provide investors with more tools for empirical analysis, with which they can identify the first order PSD and MSD prospects and discern arbitrage opportunities that could increase his/her utility as well as wealth and set up a zero dollar portfolio to make huge profit. Our tools also enable investors to identify the third order PSD and MSD prospects and make better choices.Prospect stochastic dominance, Markowitz stochastic dominance, risk seeking, risk averse, S-shaped utility function, reverse S-shaped utility function

A Signaling Theory of Grade Inflation

When employers cannot tell whether a school truly has many good students or just gives easy grades, schools have an incentive to inflate grades to help mediocre students, despite concerns about preserving the value of good grades for good students. We construct a signaling model where grades are inflated in equilibrium. The inability to commit to an honest grading policy reduces the informativeness of grades and hurts schools. Grade inflation by one school makes it easier for another school to fool the market with inflated grades. Easy grades are strategic complements, providing a channel to make grade exaggeration contagious.

On the Estimation of Cost of Capital and its Reliability

Gordon and Shapiro (1956) first equated the price of a share with the present value of future dividends and derived the well-known relationship. Since then, there have been many improvements on the theory. For example, Thompson (1985, 1987) combined the "dividend yield plus growth" method with Box-Jenkins time series analysis of past dividend experience to estimate the cost of capital and its "reliability" for individual firms. Thompson and Wong (1991, 1996) proved the existence and uniqueness of the cost of capital and provided formula to estimate both the cost of capital and its reliability. However, their approaches cannot be used if the "reliability" does not exist or if there are multiple solutions for the "reliability". In this paper, we extend their theory by proving the existence and uniqueness of this reliability. In addition, we propose the estimators for the reliability and prove that the estimators converge to a true parameter. The estimation approach is further simplified, hence rendering computation easier. In addition, the properties of the cost of capital and its reliability will be analyzed with illustrations of several commonly used Box-Jenkins models.

Metrology of IXO Mirror Segments

For future x-ray astrophysics mission that demands optics with large throughput and excellent angular resolution, many telescope concepts build around assembling thin mirror segments in a Wolter I geometry, such as that originally proposed for the International X-ray Observatory. The arc-second resolution requirement posts unique challenges not just for fabrication, mounting but also for metrology of these mirror segments. In this paper, we shall discuss the metrology of these segments using normal incidence metrological method with interferometers and null lenses. We present results of the calibration of the metrology systems we are currently using, discuss their accuracy and address the precision in measuring near-cylindrical mirror segments and the stability of the measurements

Governance of sustainable development in China: A case study of the bamboo shoot production in Lin’an County, China

Current research on bamboo shoot in China mainly focuses on the economic values, model simulation, forestry management, taxonomy, and policy implication of the bamboo production in rural areas. However, there are lacunae in both literature and approach to understand China’s bamboo production industry in relation to the linkages between governance and sustainable development. This research critically examines the governance of sustainable development of the bamboo production industry by addressing how local government and bamboo farmers make use of bamboo shoots to achieve sustainable development in Lin’an County

Infrastructure Services and Financing in Chinese Cities

As urbanization accelerates and cities expand their role in the Chinese economy, expensive urban infrastructural facilities and financing have become major policy issues. Drawing on fieldwork in five cities in 1994 as well as national statistics, this Article analyzes the provision of urban infrastructure services and financing. As marketization proceeds, an overhaul of the urban public finance system, along with a redefinition of the role of local government in China, is urgently required