Evolution of magnetic fields and mass flow in a decaying active region

Five days of coordinated observation were carried out from 24–29 September, 1987 at Big Bear and Huairou Solar Observatories. Longitudinal magnetic fields of an αp sunspot active region were observed almost continuously by the two observatories. In addition, vector magnetic fields, photospheric and chromospheric Doppler velocity fields of the active region were also observed at Huairou Solar Observatory. We studied the evolution of magnetic fields and mass motions of the active region and obtained the following results: (1) There are two kinds of Moving Magnetic Features (MMFs). (a) MMFs with the same magnetic polarity as the center sunspot. These MMFs carry net flux from the spot, move through the moat, and accumulate at the moat's outer boundary. (b) MMFs in pairs of mixed polarity. These MMFs are not responsible for the decay of the spot since they do not carry away the net flux. MMFs in category (b) move faster than those of (a). (2) The speed of the mixed polarity MMFs is larger than the outflow measured by photospheric Dopplergrams. The uni-polar MMFs are moving at about the same speed as the Doppler outflow. (3) The chromospheric velocity is in approximately the opposite direction from the photospheric velocity. The photospheric Doppler flow is outward; chromospheric flow is inward. We also found evidence that downward flow appears in the photospheric umbra; in the chromosphere there is an upflow

Fear of the Unknown: Familiarity and Economic Decisions

Evidence indicates that people fear change and the unknown. We offer a model of familiarity bias in which individuals focus on adverse scenarios in evaluating defections from the status quo. The model explains the endowment effect, portfolio underdiversification, home and local biases. Equilibrium stock prices reflect an unfamiliarity premium. In an international setting, our model implies that the absolute pricing error of the standard CAPM is positively correlated with the amount of home bias. It also predicts that a modified CAPM holds wherein the market portfolio is replaced with a portfolio of the stock holdings of investors not subject to familiarity bias.

Capital Gains Taxes and Asset Prices: Capitalization or Lock-In?

This paper examines the impact on asset prices from a reduction in the long-term capital gains tax rate using an equilibrium approach that considers both demand and supply responses. We demonstrate that the equilibrium impact of capital gains taxes reflects both the capitalization effect (i.e., capital gains taxes decrease demand) and the lock-in effect (i.e., capital gains taxes decrease supply). Depending on time periods and stock characteristics, either effect may dominate. Using the Taxpayer Relief Act of 1997 as our event, we find evidence supporting a dominant capitalization effect in the week following news that sharply increased the probability of a reduction in the capital gains tax rate and a dominant lock-in effect in the week after the rate reduction became effective. Nondividend paying stocks (whose shareholders only face capital gains taxes) experience higher average returns during the week the capitalization effect dominates and stocks with large embedded capital gains and high tax sensitive investor ownership exhibit lower average returns during the week the lock-in effect dominates. We also find that the tax cut increases the trading volume during the week immediately before and after the tax cut becomes effective and in stocks with large embedded capital gains and high tax sensitive ownership during the dominant lock-in week.