Testing Multi-Factor Asset Pricing Models in the Visegrad Countries

There is no consensus in the literature as to which model should be used to estimate stock returns and the cost of capital in the emerging markets. The Capital Asset Pricing Model (CAPM), which is most often used for this purpose in the developed markets, has a poor empirical record and is likely not to hold in the less developed and less liquid emerging markets. Various factor models have been proposed to overcome the shortcomings of the CAPM. This paper examines both the CAPM and macroeconomic factor models in terms of their ability to explain average stock returns using data from the Visegrad countries. We find, as expected, that the CAPM is not able to do this task. However, factor models, including factors such as the excess market return, industrial production, inflation, money, the exchange rate, exports, the commodity index, and the term structure, can in fact explain part of the variance in the Visegrad countries’ stock returns.CAPM, macroeconomic factor models, asset pricing, cost of capital, Poland

Reluctant Warriors: Canadian Conscripts and the Great War (Book Reivew) by Patrick Dennis

Review of Reluctant Warriors: Canadian Conscripts and the Great War by Patrick Dennis

Crossing the Canal: Combined Arms Operations at the Canal Du Nord, Sept–Oct 1918

The crossing of the Canal du Nord stands as one of the most impressive Canadian tactical operations of the First World War. Incorporating a risky battle plan, emphasizing combined arms operations and utilizing the recently re-organized Canadian Engineers, the battle stands as benchmark for the evolution of 20th century combat. Although sustaining high casualties, the Canadian Corps overcame one of the strongest German defensive positions along the Westner Front in an operation that foreshadowed the mobile, combined arms doctrine of the Second World War

Review of A Weary Road: Shell Shock in the Canadian Expeditionary Force, 1914-1918 by Mark Osborne Humphries

Review of A Weary Road: Shell Shock in the Canadian Expeditionary Force, 1914-1918 by Mark Osborne Humphries

Opinion : When disclosure is not enough

Mortgages ; Consumers

Optimal contracts for housing services purchases

In this article, we study tradeoffs associated with homeownership and renting. We consider a model in which housing capital generates housing services, but also requires regular maintenance. A household wants to purchase a flow of housing services. Maintenance on the house providing this flow to the household can be performed by the household itself or by an outside property manager. We abstract from taxes or other government distortions. The household contracts with a bank/landlord that has funds sufficient to make a lumpy housing investment. We do not assume that the bank/landlord can observe the household's effort, consumption, or savings. We show that simple renting of the house from the bank/landlord is an optimal contract for the provision of housing services to the household, conditional on the outside property manager being hired. If the manager is not hired, it is optimal for the bank/landlord to lend the money to the household to acquire housing services by purchasing a home. In this arrangement, the bank's interest is secured by a zero-down, fixed-rate mortgage with a clause prohibiting subordinated financing. We use a parameterized example to compare the values that an average household can obtain in the renting contract against the owning contract. In this example, renting clearly wins.Mortgages ; Housing ; Taxation