An Investigation of Risk and Return in Forward Foreign Exchange

This paper examines the determination of risk premiums in foreign exchange markets. The statistical model is based on a theoretical model of asset pricing, which leads to severe cross-equation constraints. Statistical tests lead to a rejection of these constraints. We examine the robustness of these tests to time variation in parameters and to the presence of heteroskedasticity. We find that there is evidence for heteroskedasticity and that the conditional expectation of the risk premium is a nonlinear function of the forward premium. Accounting for this nonlinearity, the specification appears to be time invariant. Out of sample portfolio speculaton is profItable but risky.

Foreign Currency Futures

The theoretical nature of risk premiums in foreign currency futures markets is derived and studied empirically. Estimation problems encountered in using futures data are discussed. Since forward rates and futures prices are demonstrated to be approximately equal, and because risk premiums in forward markets are highly variable, consistency of the data requires time variation in daily risk premiums in the futures market. Unbiasedness of daily futures prices as predictors of the following day's futures price is rejected for all currencies. Reconciliation of daily and monthly data requires positive serial correlation in daily risk premiums.

The Covariation of Risk Premiums and Expected Future Spot Exchange Rates

Fama(1984) analyzed the variability and the covariation of risk premiums and expected rates of depreciation. We employ three statistical techniques that do not suffer from a potential bias in Fama's analysis, but we nevertheless confirm his findings. In contrast to his interpretation the results are not necessarily at variance with the predictions of a theoretical model of the risk premium. Increases in expected rates of depreciation of the dollar relative to five foreign currencies are positively correlated with increases in the expected profitability of purchasing these currencies in the forward market, and risk premiums have larger variances than expected rates of depreciation.

CORRELATION OF CONCEPT OF AMA AND FREE RADICAL THEORY

Majority of the endogenous disease begins with the formation of Ama in the body. It has tremendous capacity to vitiate the Doshas and disturbing the homeostasis (Dhatu-samya). Ama is the resultant of improper digestion or partially digestion of the food particle due to hypofunction of Jatharagni and also due to accumulation of mala in the body and also considered as Prathamdoshadusti. It may be considered as partially or incompletely metabolized Dhatu in case of Dhatvagnimandya. In modern parameters, Ama is supposed to be deadly Free radical. Free radical is an atom/molecule that contains one or more unpaired electron, which requires neutralization by free radical scavengers. Ama is not a single entity but is a generalized term, which can be applied to many malformed substances in the body. This Ama is responsible for the production of various diseases. In the same way, free radicals are also found to be the root cause of many diseases. Here we discuss about properties and qualities in both entities, which are similar and dissimilar, also whether free radicals can be considered under Ama. The present article attempts to correlate the most recent concept of todays i. e. free radical concept with that of the concept of Ama, described in research for remedies from Ayurvedic research, which may be helpful in the presentation and care of free radicals mediated disease

Nash Implementation Using Undominated Strategies

This paper provides a characterization of fully implementable outcomes using undominated Nash equilibrium, i.e. a Nash equilibrium in which no one uses a weakly dominated strategy. The analysis is conducted in general domains in which agents have complete information. Our main result is that with at least three agents any social choice function or correspondence obeying the usual no veto power condition is implementable unless some players are completely indifferent over all possible outcomes. This result is contrasted with the more restrictive implementation findings with either (unrefined) Nash equilibrium or subgame perfect equilibrium