Asset Returns, Discount Rate Changes and Market Efficiency

The primary purpose of this paper is to reconcile the previous findings of discount rate endogeneity with the presence of discount rate announcement effects in securities markets. The crux of this reconciliation is the dictinction between "technicral" discount rate changes that are endogenous and "non-technical" changes which contain some informative policy implications. In essence, we attempt to separate expected discount rate changes from unexpected changes, or equivalently, the expected component of discount rate changes from the unexpected component. If markets are efficient, the former should have no announcement effects while the latter may be associated with an announcement effect. Accordingly, the focus of the empirical analysis is on the interaction between discount rate exogeneity, the specific monetary policy regime, and announcement effects. In addition, we examine whether the behaviorof these markets in the post-announcement period is consistent with the rapid price adjustment implied by market efficiency.

The Effect of Risk on the Firm's Optimal Capital Stock: A Note

In this paper we extend the recent work on the choice of input mix under uncertainty. In particular, we demonstrate that the qualitative nature of the disturbance term, along with the decision sequence, is a crucial determinant of the overall effect of uncertainty on the optimal input mix of a firm. Using general demand and production functions in conjunction with a mean-variance framework for financial valuation, we demonstrate the differential effects of systematic and non-systematic risk on the firm's choice of an optimal input mix. Consistent with earlier work in economics, this analysis demonstrates that uncertainty, regardless of the source, has important implications for the firm's choice of technology.

Taxes, Default Risk, and Yield Spreads

This paper represents an extension and integration of recent empirical and theoretical research on default risk and taxability. The purpose of the paper is to develop and test a model of interest rate spreads which incorporates both the effect of taxes and differences in default probabilities in a theoretically correct manner. There is an important fundamental difference between our approach to explaining yield spreads and the approach most commonly taken in literature. Unlike nearly all of the previous work, we do not begin with a yield spread model, i.e.,one which begins by examining differences in yields, but rather begin with an expected return or pricing model, which can then be expressed in the yield spread format. This is a fundamental difference in approaches which we feel leads to a superior theoretical formulation which can then be tested empirically without many of the problems inherent in the alter-native approach. The theoretical model is a simple extension of earlierwork on default by Bierman and Hass (1975) and Yawitz (1977), altered appropriately to take explicit account of tax effects. While there is a considerable literature that analyzes the effect of taxability on rate spreads, we are unaware of any previous study that considers tax consequences in the event of default, a rather surprising omission.

“But I Hope You’re Not Offended”: A Look at Bruce Norris’ Clybourne Park Through the Structural Perspective of Critical Race Theory

This Independent Study explores how the structural perspective of Critical Race Theory can be applied to Bruce Norris’ award-winning 2010 play, Clybourne Park. Clybourne Park takes place in both 1959 and 2009, in the house the Younger family from A Raisin in the Sun eventually moves into, in the fictional Chicago neighborhood of Clybourne Park. This I.S. looks at what individual, institutional, and societal subordinating filters appear in both Clybourne Park and the play that inspired it, Lorraine Hansberry’s 1959 A Raisin in the Sun. By looking at the subordinating filters working in Clybourne Park, it is possible to see how racism and subordination throughout the 20th century and into the beginning of the 21st century in the United States has both changed and remained the same, and whether it is possible for the target audience of Clybourne Park to change its perspective and actions in the context of racism and subordination